A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
Luckily for you, we built StockStory to help you separate the good from the bad. Keeping that in mind, here is one cash-producing company that excels at turning cash into shareholder value and two that may struggle to keep up.
Two Stocks to Sell:
Cushman & Wakefield (CWK)
Trailing 12-Month Free Cash Flow Margin: 2.8%
With expertise in the commercial real estate sector, Cushman & Wakefield (NYSE: CWK) is a global Chicago-based real estate firm offering a comprehensive range of services to clients.
Why Is CWK Risky?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 5.6% over the last five years was below our standards for the consumer discretionary sector
- Free cash flow margin is not anticipated to grow over the next year
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Cushman & Wakefield is trading at $13.89 per share, or 9.7x forward P/E. Read our free research report to see why you should think twice about including CWK in your portfolio.
UFP Industries (UFPI)
Trailing 12-Month Free Cash Flow Margin: 4.4%
Beginning as a lumber supplier in the 1950s, UFP Industries (NASDAQ: UFPI) is a holding company making building materials for the construction, retail, and industrial sectors.
Why Do We Avoid UFPI?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 6.4% annually over the last two years
- Sales were less profitable over the last two years as its earnings per share fell by 21.3% annually, worse than its revenue declines
- Eroding returns on capital suggest its historical profit centers are aging
UFP Industries’s stock price of $93.01 implies a valuation ratio of 18x forward P/E. To fully understand why you should be careful with UFPI, check out our full research report (it’s free).
One Stock to Buy:
AZZ (AZZ)
Trailing 12-Month Free Cash Flow Margin: 26.5%
Responsible for projects like nuclear facilities, AZZ (NYSE: AZZ) is a provider of metal coating and power infrastructure solutions.
Why Will AZZ Outperform?
- Market share has increased this cycle as its 12.7% annual revenue growth over the last five years was exceptional
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 22.3% annually, topping its revenue gains
- Free cash flow margin expanded by 25.1 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
At $134.00 per share, AZZ trades at 21.1x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
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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.
