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. 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:
Pool (POOL)
Trailing 12-Month Free Cash Flow Margin: 5.6%
Founded in 1993 and headquartered in Louisiana, Pool (NASDAQ: POOL) is one of the largest wholesale distributors of swimming pool supplies, equipment, and related leisure products.
Why Are We Bearish on POOL?
- Annual revenue growth of 2.2% over the last five years was below our standards for the consumer discretionary sector
- Low free cash flow margin of 6.9% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
Pool’s stock price of $186.64 implies a valuation ratio of 16.5x forward P/E. To fully understand why you should be careful with POOL, check out our full research report (it’s free).
Two Stocks to Watch:
United Rentals (URI)
Trailing 12-Month Free Cash Flow Margin: 12.4%
Owning the largest rental fleet in the world, United Rentals (NYSE: URI) provides equipment rental and related services to construction, industrial, and infrastructure industries.
Why Could URI Be a Winner?
- Impressive 13.8% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Disciplined cost controls and effective management resulted in a strong long-term operating margin of 26.1%
- Share buybacks catapulted its annual earnings per share growth to 19.5%, which outperformed its revenue gains over the last five years
United Rentals is trading at $1,038 per share, or 19.6x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Aramark (ARMK)
Trailing 12-Month Free Cash Flow Margin: 2.3%
From serving hot dogs at major league stadiums to managing college dining halls that feed thousands daily, Aramark (NYSE: ARMK) provides food services and facilities management to schools, healthcare facilities, businesses, sports venues, and correctional institutions across 16 countries.
Why Do We Love ARMK?
- Annual revenue growth of 12% over the past five years was outstanding, reflecting market share gains this cycle
- Dominant market position is represented by its $19.85 billion in revenue and gives it fixed cost leverage when sales grow
- Incremental sales over the last five years have been highly profitable as its earnings per share increased by 34.5% annually, topping its revenue gains
At $56.24 per share, Aramark trades at 22x 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.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating 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.
