While strong cash flow is a key indicator of stability, it doesn’t always translate to superior returns. Some cash-heavy businesses struggle with inefficient spending, slowing demand, or weak competitive positioning.

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 excels at turning cash into shareholder value and two best left off your watchlist.

Two Stocks to Sell:

Zurn Elkay (ZWS)

Trailing 12-Month Free Cash Flow Margin: 16.4%

Claiming to have saved more than 30 billion gallons of water, Zurn Elkay (NYSE: ZWS) provides water management solutions to various industries.

Why Does ZWS Give Us Pause?

1. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
2. Estimated sales growth of 3.5% for the next 12 months implies demand will slow from its two-year trend
3. Revenue growth over the past five years was nullified by the company’s new share issuances as its earnings per share fell by 8.8% annually

Zurn Elkay is trading at $37.33 per share, or 27.4x forward P/E. To fully understand why you should be careful with ZWS, check out our full research report (it’s free).

UniFirst (UNF)

Trailing 12-Month Free Cash Flow Margin: 6.1%

With a fleet of trucks making weekly deliveries to over 300,000 customer locations, UniFirst (NYSE: UNF) provides, rents, cleans, and maintains workplace uniforms and protective clothing for businesses across various industries.

Why Is UNF Not Exciting?

1. Estimated sales growth of 1% for the next 12 months implies demand will slow from its two-year trend
2. Incremental sales over the last five years were less profitable as its earnings per share were flat while its revenue grew
3. Underwhelming 7.4% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its falling returns suggest its earlier profit pools are drying up

At $178.09 per share, UniFirst trades at 21.1x forward P/E. Dive into our free research report to see why there are better opportunities than UNF.

One Stock to Buy:

Nextracker (NXT)

Trailing 12-Month Free Cash Flow Margin: 21%

With its technology playing a key role in the massive 1.2 gigawatt Noor Abu Dhabi solar farm project, Nextracker (NASDAQ: NXT) is a provider of solar tracker systems that help solar panels follow the sun.

Why Are We Bullish on NXT?

1. Average backlog growth of 46.5% over the past two years shows it has a steady sales pipeline that will drive future orders
2. Free cash flow margin expanded by 13.6 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
3. Returns on capital are climbing as management makes more lucrative bets

Nextracker’s stock price of $59.74 implies a valuation ratio of 15.4x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.

Stocks We Like Even More

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.