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 excels at turning cash into shareholder value and two best left off your watchlist.\n\nTwo Stocks to Sell: \n\nIPG Photonics (IPGP)\nTrailing 12-Month Free Cash Flow Margin: 6.8%\nBoth a designer and manufacturer of its products, IPG Photonics is a provider of high-performance fiber lasers used for cutting, welding, and processing raw materials. \nWhy Should You Sell IPGP?\nAnnual sales declines of 4.3% for the past five years show its products and services struggled to connect with the market during this cycle\nSales were less profitable over the last five years as its earnings per share fell by 20.5% annually, worse than its revenue declines\nFree cash flow margin dropped by 11.6 percentage points over the last five years, implying the company became more capital intensive as competition picked up\nIPG Photonics is trading at $75.26 per share, or 62x forward P/E.\n\nBel Fuse (BELFA)\nTrailing 12-Month Free Cash Flow Margin: 8.1%\nFounded by 26-year-old Elliot Bernstein during the electronics boom after WW2, Bel Fuse (NASDAQ:BELF.A) provides electronic systems and devices to the telecommunications, networking, transportation, and industrial sectors. \nWhy Does BELFA Worry Us?\nProducts and services are facing significant end-market challenges during this cycle as sales have declined by 7.1% annually over the last two years\nEarnings per share have contracted by 16.2% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance\nAt $115.50 per share, Bel Fuse trades at 11.9x forward EV-to-EBITDA.\n\nOne Stock to Watch: \n\nColgate-Palmolive (CL)\nTrailing 12-Month Free Cash Flow Margin: 16.9%\nFormed after the 1928 combination between toothpaste maker Colgate and soap maker Palmolive-Peet, Colgate-Palmolive is a consumer products company that focuses on personal, household, and pet products. \nWhy Could CL Be a Winner?\nProducts command premium prices and lead to a best-in-class gross margin of 60.2%\nCL is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders\nMarket-beating returns on capital illustrate that management has a knack for investing in profitable ventures, and its returns are climbing as it finds even more attractive growth opportunities\nColgate-Palmolive’s stock price of $84.67 implies a valuation ratio of 22.3x forward P/E. Is now a good time to buy? \n\nStocks We Like Even More\nTrump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines. Take advantage of the rebound by checking out 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 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 Worth Your Attention and 2 That Underwhelm

The article evaluates three consumer and industrial stocks based on their cash flow performance and long-term financial health. It identifies Colgate-Palmolive as a strong cash-producing company with a high free cash flow margin and strong profitability, recommending it as a potential buy. In contrast, it advises selling IPG Photonics and Bel Fuse due to declining sales, shrinking margins, and weak earnings performance over recent years. The piece also references a broader market context, noting that a tariff announcement by Trump in April 2025 triggered a selloff that has since recovered, and highlights a curated list of high-performing growth stocks with strong five-year returns.