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 are two cash-producing companies that excel at turning cash into shareholder value and one that may face some trouble.
One Stock to Sell:
Alamo (ALG)
Trailing 12-Month Free Cash Flow Margin: 8.1%
Expanding its markets through acquisitions since its founding, Alamo (NYSE:ALG) designs, manufactures, and services vegetation management and infrastructure maintenance equipment for governmental, industrial, and agricultural use.
Why Does ALG Give Us Pause?
- Flat sales over the last two years suggest it must find different ways to grow during this cycle
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 4.2%
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
At $165.32 per share, Alamo trades at 15.3x forward P/E. Check out our free in-depth research report to learn more about why ALG doesn’t pass our bar.
Two Stocks to Watch:
Astec (ASTE)
Trailing 12-Month Free Cash Flow Margin: 2.1%
Inventing the first ever double-barrel hot-mix asphalt plant, Astec (NASDAQ:ASTE) provides machines and equipment for building roads, processing raw materials, and producing concrete.
Why Could ASTE Be a Winner?
- 9.6% annual revenue growth over the last two years surpassed the sector average as its offerings resonated with customers
- Operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 27.9% outpaced its revenue gains
Astec’s stock price of $44.50 implies a valuation ratio of 11x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
Magnite (MGNI)
Trailing 12-Month Free Cash Flow Margin: 23.5%
Born from the 2020 merger of Rubicon Project and Telaria, Magnite (NASDAQ:MGNI) operates the world's largest independent sell-side advertising platform that automates the buying and selling of digital advertising inventory across all channels and formats.
Why Do We Love MGNI?
- Impressive 18.4% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Strong free cash flow margin of 23.6% enables it to reinvest or return capital consistently
- Rising returns on capital show the company is starting to reap the benefits of its past investments
Magnite is trading at $24.50 per share, or 20.4x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.