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. 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:
Latham (SWIM)
Trailing 12-Month Free Cash Flow Margin: 6.4%
Started as a family business, Latham (NASDAQ:SWIM) is a global designer and manufacturer of in-ground residential swimming pools and related products.
Why Should You Sell SWIM?
- Products and services fail to spark excitement with consumers, as seen in its flat sales over the last five years
- Capital intensity will likely ramp up in the next year as its free cash flow margin is expected to contract by 8.3 percentage points
- Returns on capital are increasing as management makes relatively better investment decisions
Latham is trading at $7.20 per share, or 27.1x forward P/E. Dive into our free research report to see why there are better opportunities than SWIM.
Baldwin Insurance Group (BWIN)
Trailing 12-Month Free Cash Flow Margin: 2.5%
Rebranded from BRP Group in May 2024, Baldwin Insurance Group (NASDAQ:BWIN) is an independent insurance distribution company that provides tailored insurance, risk management, and employee benefits solutions to businesses and individuals.
Why Does BWIN Fall Short?
- Day-to-day expenses have swelled relative to revenue over the last five years as its adjusted operating margin fell by 8.2 percentage points
- Poor free cash flow margin of -1% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- 6× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
At $31.15 per share, Baldwin Insurance Group trades at 13.3x forward P/E. To fully understand why you should be careful with BWIN, check out our full research report (it’s free).
One Stock to Watch:
Littelfuse (LFUS)
Trailing 12-Month Free Cash Flow Margin: 17%
The developer of the first blade-type automotive fuse, Littelfuse (NASDAQ:LFUS) provides electrical protection and control components for the automotive, industrial, electronics, and telecommunications industries.
Why Are We Positive on LFUS?
- Projected revenue growth of 18.3% for the next 12 months is above its two-year trend, pointing to accelerating demand
- Earnings per share grew by 22.8% annually over the last two years, massively outpacing its peers
- Robust free cash flow margin of 14.5% gives it many options for capital deployment, and its improved cash conversion implies it’s becoming a less capital-intensive business
Littelfuse’s stock price of $414.09 implies a valuation ratio of 22.8x 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
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 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-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.