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 reinvests wisely to drive long-term success and two that may face some trouble.
Two Industrials Stocks to Sell:
Textron (TXT)
Trailing 12-Month Free Cash Flow Margin: 4.1%
Listed on the NYSE in 1947, Textron (NYSE: TXT) provides products and services in the aerospace, defense, industrial, and finance sectors.
Why Does TXT Fall Short?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Anticipated sales growth of 6.8% for the next year implies demand will be shaky
- Free cash flow margin shrank by 5.1 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Textron’s stock price of $68.56 implies a valuation ratio of 11x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than TXT.
Matrix Service (MTRX)
Trailing 12-Month Free Cash Flow Margin: 15.3%
Founded in Oklahoma, Matrix Service (NASDAQ: MTRX) provides engineering, fabrication, construction, and maintenance services primarily to the energy and industrial markets.
Why Do We Pass on MTRX?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 12.9% annually over the last five years
- High input costs result in an inferior gross margin of 4.4% that must be offset through higher volumes
- Earnings per share decreased by more than its revenue over the last five years, partly because it diluted shareholders
At $11.98 per share, Matrix Service trades at 17.1x forward price-to-earnings. If you’re considering MTRX for your portfolio, see our FREE research report to learn more.
One Industrials Stock to Buy:
Curtiss-Wright (CW)
Trailing 12-Month Free Cash Flow Margin: 15.5%
Formed from a merger of 12 companies, Curtiss-Wright (NYSE: CW) provides a range of products and services to the aerospace, industrial, electronic, and maritime industries.
Why Will CW Outperform?
- 10.5% annual revenue growth over the last two years surpassed the sector average as its offerings resonated with customers
- Share repurchases over the last two years enabled its annual earnings per share growth of 17.7% to outpace its revenue gains
- Free cash flow margin jumped by 6.5 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Curtiss-Wright is trading at $339.01 per share, or 28.2x forward price-to-earnings. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.
