1 Cash-Producing Stock for Long-Term Investors and 2 We Avoid

Generating cash is essential for any business, but not all cash-rich companies are great investments. Some produce plenty of cash but fail to allocate it effectively, leading to missed opportunities.

Not all companies are created equal, and StockStory is here to surface the ones with real upside. Keeping that in mind, here is one cash-producing company that reinvests wisely to drive long-term success and two best left off your watchlist.

Two Stocks to Sell:

The Marzetti Company (MZTI)

Trailing 12-Month Free Cash Flow Margin: 11.9%

Known for its frozen garlic bread and Parkerhouse rolls, The Marzetti Company (NASDAQ:MZTI) sells bread, dressing, and dips to the retail and food service channels.

Why Does MZTI Give Us Pause?

1. Muted 3% annual revenue growth over the last three years shows its demand lagged behind its consumer staples peers
2. Projected sales growth of 1.5% for the next 12 months suggests sluggish demand
3. Gross margin of 23.4% is an output of its commoditized products

At $159.71 per share, The Marzetti Company trades at 22x forward P/E. Read our free research report to see why you should think twice about including MZTI in your portfolio.

Disney (DIS)

Trailing 12-Month Free Cash Flow Margin: 7.4%

Founded by brothers Walt and Roy, Disney (NYSE:DIS) is a multinational entertainment conglomerate, renowned for its theme parks, movies, television networks, and merchandise.

Why Do We Think DIS Will Underperform?

1. The company has faced growth challenges as its 9.5% annual revenue increases over the last five years fell short of other consumer discretionary companies
2. Subpar operating margin of 14.8% constrains its ability to invest in process improvements or effectively respond to new competitive threats
3. Poor free cash flow margin of 8.2% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends

Disney’s stock price of $105.35 implies a valuation ratio of 14.7x forward P/E. Check out our free in-depth research report to learn more about why DIS doesn’t pass our bar.

One Stock to Watch:

ITT (ITT)

Trailing 12-Month Free Cash Flow Margin: 14.1%

Playing a crucial role in the development of the first transatlantic television transmission in 1956, ITT (NYSE:ITT) provides motion and fluid handling equipment for various industries

Why Are We Positive On ITT?

1. Annual revenue growth of 9.7% over the last five years beat the sector average and underscores the unique value of its offerings
2. Healthy operating margin of 17.2% shows it’s a well-run company with efficient processes
3. Free cash flow margin grew by 17.6 percentage points over the last five years, giving the company more chips to play with

ITT is trading at $203.20 per share, or 27.5x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.

Stocks We Like Even More

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here in our Top 5 Growth Stocks for this month. 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 Exlservice (+354% five-year return). Find your next big winner with StockStory today.