While strong cash flow is a key indicator of stability, it doesn’t always translate to superior returns. Some cash-heavy businesses struggle with inefficient spending, slowing demand, or weak competitive positioning.
Not all companies are created equal, and StockStory is here to surface the ones with real upside. That said, here is one cash-producing company that leverages its financial strength to beat its competitors and two that may struggle to keep up.
Two Industrials Stocks to Sell:
Allient (ALNT)
Trailing 12-Month Free Cash Flow Margin: 7.5%
Founded in 1962, Allient (NASDAQ: ALNT) develops and manufactures precision and specialty-controlled motion components and systems.
Why Is ALNT Risky?
- Annual sales declines of 1.7% for the past two years show its products and services struggled to connect with the market during this cycle
- Projected sales growth of 3.7% for the next 12 months suggests sluggish demand
- Earnings per share decreased by more than its revenue over the last two years, partly because it diluted shareholders
Allient’s stock price of $33 implies a valuation ratio of 17.2x forward P/E. Dive into our free research report to see why there are better opportunities than ALNT.
WESCO (WCC)
Trailing 12-Month Free Cash Flow Margin: 1.5%
Based in Pittsburgh, WESCO (NYSE: WCC) provides electrical, industrial, and communications products and augments them with services such as supply chain management.
Why Are We Cautious About WCC?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Earnings per share have dipped by 15.3% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Free cash flow margin shrank by 3.4 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
WESCO is trading at $171.24 per share, or 12.1x forward P/E. Check out our free in-depth research report to learn more about why WCC doesn’t pass our bar.
One Industrials Stock to Watch:
Lennox (LII)
Trailing 12-Month Free Cash Flow Margin: 14.4%
Based in Texas and founded over a century ago, Lennox (NYSE: LII) is a climate control solutions company offering heating, ventilation, air conditioning, and refrigeration (HVACR) goods.
Why Is LII Interesting?
- Operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
- Earnings per share grew by 24.3% annually over the last two years and trumped its peers
- Industry-leading 50.4% return on capital demonstrates management’s skill in finding high-return investments
At $594.22 per share, Lennox trades at 25x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio 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 176% over the last five years.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free.
