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. That said, 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:
Ingersoll Rand (IR)
Trailing 12-Month Free Cash Flow Margin: 15.9%
Started with the invention of the steam drill, Ingersoll Rand (NYSE: IR) provides mission-critical air, gas, liquid, and solid flow creation solutions.
Why Does IR Fall Short?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 4.1%
- Underwhelming 5.9% return on capital reflects management’s difficulties in finding profitable growth opportunities
At $93.03 per share, Ingersoll Rand trades at 26.8x forward P/E. To fully understand why you should be careful with IR, check out our full research report (it’s free).
Verisk (VRSK)
Trailing 12-Month Free Cash Flow Margin: 38.8%
Processing over 2.8 billion insurance transaction records annually through one of the world's largest private databases, Verisk Analytics (NASDAQ: VRSK) provides data, analytics, and technology solutions that help insurance companies assess risk, detect fraud, and make better business decisions.
Why Is VRSK Not Exciting?
- 2% annual revenue growth over the last five years was slower than its business services peers
- Estimated sales growth of 4.3% for the next 12 months implies demand will slow from its two-year trend
- Earnings growth underperformed the sector average over the last five years as its EPS grew by just 7.2% annually
Verisk’s stock price of $195.84 implies a valuation ratio of 25.1x forward P/E. Check out our free in-depth research report to learn more about why VRSK doesn’t pass our bar.
One Stock to Watch:
Colgate-Palmolive (CL)
Trailing 12-Month Free Cash Flow Margin: 17.8%
Formed after the 1928 combination between toothpaste maker Colgate and soap maker Palmolive-Peet, Colgate-Palmolive (NYSE: CL) is a consumer products company that focuses on personal, household, and pet products.
Why Could CL Be a Winner?
- Unparalleled brand awareness is evident in its $20.38 billion revenue base, which gives it advantageous terms because retailers must stock its products
- Unique products and pricing power are reflected in its best-in-class gross margin of 60.3%
- Strong free cash flow margin of 17.7% enables it to reinvest or return capital consistently
Colgate-Palmolive is trading at $97.00 per share, or 25.3x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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 Strong Momentum Stocks for this week. 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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
