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. 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 leverages its financial strength to beat its competitors and two best left off your watchlist.\n\nTwo Stocks to Sell: \n\nLatham (SWIM)\nTrailing 12-Month Free Cash Flow Margin: 2.3%\nStarted as a family business, Latham is a global designer and manufacturer of in-ground residential swimming pools and related products.\nWhy Are We Wary of SWIM?\nSales tumbled by 7.7% annually over the last two years, showing consumer trends are working against its favor\nFree cash flow margin is forecasted to shrink by 1.7 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors\nBelow-average returns on capital indicate management struggled to find compelling investment opportunities\nLatham is trading at $7.24 per share, or 52.7x forward P/E.\n\nBuilders FirstSource (BLDR)\nTrailing 12-Month Free Cash Flow Margin: 7.5%\nHeadquartered in Irving, TX, Builders FirstSource is a construction materials manufacturer that offers a variety of lumber and lumber-related building products.\nWhy Are We Cautious About BLDR?\nAnnual sales declines of 7.2% for the past two years show its products and services struggled to connect with the market during this cycle\nEarnings per share have dipped by 22.1% annually over the past two years, which is concerning because stock prices follow EPS over the long term\nShrinking returns on capital suggest that increasing competition is eating into the company’s profitability\nAt $132.99 per share, Builders FirstSource trades at 15.4x forward P/E.\n\nOne Stock to Watch: \n\nItron (ITRI)\nTrailing 12-Month Free Cash Flow Margin: 11.8%\nFounded by a small group of engineers who wanted to build a more efficient way to read utility meters, Itron offers energy and water management products for the utility industry, municipalities, and industrial customers.\nWhy Do We Like ITRI?\nEfficiency rose over the last five years as its Operating margin increased by 10.3 percentage points\nPerformance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 74.4% outpaced its revenue gains\nRising returns on capital show the company is starting to reap the benefits of its past investments\nItron’s stock price of $125.50 implies a valuation ratio of 23x forward P/E. Is now the right time to buy? \n\nStocks We Like Even More\nWhen Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses. Don’t let fear keep you from great opportunities and take a look at Top 6 Stocks for this week. 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-micro-cap company Kadant (+351% five-year return).

1 Cash-Producing Stock to Consider Right Now and 2 We Question

The article evaluates three stocks based on their cash flow performance and long-term growth potential. It identifies Itron (ITRI) as a stock to watch due to strong free cash flow margins, rising operating margins, and profitable incremental sales. Latham (SWIM) and Builders FirstSource (BLDR) are flagged for caution due to declining sales, shrinking free cash flow margins, and falling earnings per share. The piece also references a broader list of high-performing stocks, including Nvidia and Kadant, which have delivered strong returns since 2020, noting that market reactions to Trump's tariff plan in April 2025 led to a subsequent rebound in these assets.