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.
Luckily for you, we built StockStory to help you separate the good from the bad. Keeping that in mind, here are two cash-producing companies that leverage their financial strength to beat the competition and one best left off your watchlist.
One Industrials Stock to Sell:
Atmus Filtration Technologies (ATMU)
Trailing 12-Month Free Cash Flow Margin: 8.4%
Spun out of Cummins in 2023 after 65 years as part of the engine maker, Atmus Filtration Technologies (NYSE: ATMU) manufactures filters for trucks, construction equipment, and agriculture machinery to reduce emissions and protect engines.
Why Does ATMU Fall Short?
- Muted 4.1% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
- Gross margin of 26.3% reflects its high production costs
- Free cash flow margin dropped by 3.4 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Atmus Filtration Technologies is trading at $56.98 per share, or 19.7x forward P/E. Check out our free in-depth research report to learn more about why ATMU doesn’t pass our bar.
Two Industrials Stocks to Buy:
Sterling (STRL)
Trailing 12-Month Free Cash Flow Margin: 14.6%
Involved in the construction of a major highway, the Grand Parkway in Houston, TX, Sterling Infrastructure (NASDAQ: STRL) provides civil infrastructure construction.
Why Are We Bullish on STRL?
- Annual revenue growth of 12.4% over the past two years was outstanding, reflecting market share gains this cycle
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its growing cash flow gives it even more resources to deploy
- Rising returns on capital show management is finding more attractive investment opportunities
At $405.30 per share, Sterling trades at 31.1x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
HEICO (HEI)
Trailing 12-Month Free Cash Flow Margin: 18.1%
Founded in 1957, HEICO (NYSE: HEI) manufactures and services aerospace and electronic components for commercial aviation, defense, space, and other industries.
Why Are We Backing HEI?
- Annual revenue growth of 19.5% over the past two years was outstanding, reflecting market share gains this cycle
- Earnings growth has trumped its peers over the last two years as its EPS has compounded at 28.6% annually
- HEI is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
HEICO’s stock price of $290.55 implies a valuation ratio of 52.9x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum — both boxes checked at the same time.
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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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
