1 Cash-Producing Stock with Promising Prospects and 2 We Brush Off

A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.

Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. Keeping that in mind, here is one cash-producing company that leverages its financial strength to beat its competitors and two best left off your watchlist.

Two Stocks to Sell:

ESAB (ESAB)

Trailing 12-Month Free Cash Flow Margin: 8.5%

Having played a significant role in the construction of the iconic Sydney Opera House, ESAB (NYSE:ESAB) manufactures and sells welding and cutting equipment for numerous industries.

Why Do We Steer Clear of ESAB?

1. Flat sales over the last two years suggest it must find different ways to grow during this cycle
2. Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
3. 3.2 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position

ESAB’s stock price of $133.98 implies a valuation ratio of 23.7x forward P/E. If you’re considering ESAB for your portfolio, see our FREE research report to learn more.

RTX (RTX)

Trailing 12-Month Free Cash Flow Margin: 9%

Originally focused on refrigeration technology, Raytheon (NSYE:RTX) provides a a variety of products and services to the aerospace and defense industries.

Why Does RTX Give Us Pause?

1. The company has faced growth challenges as its 6.5% annual revenue increases over the last five years fell short of other industrials companies
2. Estimated sales growth of 5.6% for the next 12 months implies demand will slow from its two-year trend
3. Below-average returns on capital indicate management struggled to find compelling investment opportunities

At $200.58 per share, RTX trades at 28.8x forward P/E. Read our free research report to see why you should think twice about including RTX in your portfolio.

One Stock to Watch:

WD-40 (WDFC)

Trailing 12-Month Free Cash Flow Margin: 12.6%

Short for “Water Displacement perfected on the 40th try”, WD-40 (NASDAQ:WDFC) is a renowned American consumer goods company known for its iconic and versatile spray, WD-40 Multi-Use Product.

Why Does WDFC Catch Our Eye?

1. Products command premium prices and result in a premier gross margin of 54.5%
2. WDFC is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
3. Industry-leading 26.2% return on capital demonstrates management’s skill in finding high-return investments, and its rising returns show it’s making even more lucrative bets

WD-40 is trading at $239.61 per share, or 38x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.

Stocks We Like Even More

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.