A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
Not all companies are created equal, and StockStory is here to surface the ones with real upside. Keeping that in mind, here are two cash-producing companies that reinvest wisely to drive long-term success and one best left off your watchlist.
One stock to sell:
Carlisle (CSL)
Trailing 12-Month Free Cash Flow Margin: 17%
Originally founded as Carlisle Tire and Rubber Company, Carlisle Companies (NYSE: CSL) is a multi-industry product manufacturer focusing on construction materials and weatherproofing technologies.
Why Does CSL Give Us Pause?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Projected sales growth of 5.8% for the next 12 months suggests sluggish demand
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 3.6% annually
At $352.84 per share, Carlisle trades at 15.1x forward P/E. Read our free research report to see why you should think twice about including CSL in your portfolio.
Two stocks to buy:
Fastenal (FAST)
Trailing 12-Month Free Cash Flow Margin: 13%
Founded in 1967, Fastenal (NASDAQ: FAST) provides industrial and construction supplies, including fasteners, tools, safety products, and many other product categories to businesses globally.
Why Should You Buy FAST?
- Offerings are mission-critical for businesses and result in a best-in-class gross margin of 45.3%
- Highly efficient business model is illustrated by its impressive 20.5% operating margin
- Industry-leading 32.3% return on capital demonstrates management’s skill in finding high-return investments
Fastenal’s stock price of $52.32 implies a valuation ratio of 38x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
McKesson (MCK)
Trailing 12-Month Free Cash Flow Margin: 1.5%
With roots dating back to 1833, making it one of America's oldest continuously operating businesses, McKesson (NYSE: MCK) is a healthcare services company that distributes pharmaceuticals, medical supplies, and provides technology solutions to pharmacies, hospitals, and healthcare providers.
Why Are We Bullish on MCK?
- Offerings and unique value proposition resonate with customers, as seen in its above-market 14.5% annual sales growth over the last two years
- Unparalleled scale of $411 billion in revenue gives it negotiating leverage and staying power in an industry with high barriers to entry
- Share repurchases over the last five years enabled its annual earnings per share growth of 15.3% to outpace its revenue gains
McKesson is trading at $1,010 per share, or 21.8x forward P/E. Is now a good time to buy? Find out in our full 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 meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
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-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
