1 Cash-Producing Stock on Our Buy List and 2 We Brush Off

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.

Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. That said, here is one cash-producing company that excels at turning cash into shareholder value and two that may face some trouble.

Two Stocks to Sell:

BJ's (BJRI)

Trailing 12-Month Free Cash Flow Margin: 2.9%

Founded in 1978 in California, BJ’s Restaurants (NASDAQ:BJRI) is a chain of restaurants whose menu features classic American dishes, often with a twist.

Why Do We Avoid BJRI?

1. Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
2. Lacking pricing power results in an inferior gross margin of 14.9% that must be offset by turning more tables
3. Low returns on capital reflect management’s struggle to allocate funds effectively

At $35.14 per share, BJ's trades at 15.4x forward P/E. Check out our free in-depth research report to learn more about why BJRI doesn’t pass our bar.

Masimo (MASI)

Trailing 12-Month Free Cash Flow Margin: 14.4%

Founded in 1989 to solve the "unsolvable problem" of accurate pulse oximetry during patient movement, Masimo (NASDAQ:MASI) develops and manufactures noninvasive patient monitoring technologies, including its breakthrough pulse oximetry systems that accurately measure blood oxygen levels even during patient movement.

Why Does MASI Worry Us?

1. Annual sales declines of 16.3% for the past two years show its products and services struggled to connect with the market during this cycle
2. Subscale operations are evident in its revenue base of $1.48 billion, meaning it has fewer distribution channels than its larger rivals
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

Masimo is trading at $175.41 per share, or 30.5x forward P/E. Read our free research report to see why you should think twice about including MASI in your portfolio.

One Stock to Buy:

HNI (HNI)

Trailing 12-Month Free Cash Flow Margin: 7.4%

With roots dating back to 1944 and a significant acquisition of Kimball International in 2023, HNI (NYSE:HNI) manufactures and sells office furniture systems, seating, and storage solutions, as well as residential fireplaces and heating products.

Why Do We Love HNI?

1. 8% annual revenue growth over the last two years surpassed the sector average as its services resonated with customers
2. Projected revenue growth of 116% for the next 12 months is above its two-year trend, pointing to accelerating demand
3. Additional sales over the last five years increased its profitability as the 14.3% annual growth in its earnings per share outpaced its revenue

HNI’s stock price of $43.30 implies a valuation ratio of 10.7x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.

Stocks We Like Even More

ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.

Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.

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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.