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.

Luckily for you, we built StockStory to help you separate the good from the bad. That said, here are two cash-producing companies that excel at turning cash into shareholder value and one best left off your watchlist.

One Stock to Sell:

Snap-on (SNA)

Trailing 12-Month Free Cash Flow Margin: 20.3%

Founded in 1920, Snap-on (NYSE: SNA) is a global provider of tools, equipment, and diagnostics for various industries such as vehicle repair, aerospace, and the military.

Why Are We Cautious About SNA?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
2. Flat earnings per share over the last two years underperformed the sector average
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

At $370.46 per share, Snap-on trades at 3.7x forward price-to-sales. Dive into our free research report to see why there are better opportunities than SNA.

Two Stocks to Watch:

Sprouts (SFM)

Trailing 12-Month Free Cash Flow Margin: 4.1%

Playing on the secular trend of healthier living, Sprouts Farmers Market (NASDAQ: SFM) is a grocery store chain emphasizing natural and organic products.

Why Could SFM Be a Winner?

1. Fast expansion of new stores to reach markets with few or no locations is justified by its same-store sales growth
2. Comparable store sales rose by 6.8% on average over the past two years, demonstrating its ability to drive increased spending at existing locations
3. Expected revenue growth of 9.6% for the next year suggests its market share will rise

Sprouts’s stock price of $81.69 implies a valuation ratio of 14.4x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.

Acuity Brands (AYI)

Trailing 12-Month Free Cash Flow Margin: 12.2%

One of the pioneers of smart lights, Acuity (NYSE: AYI) designs and manufactures light fixtures and building management systems used in various industries.

Why Are We Positive On AYI?

1. Offerings and unique value proposition resonate with customers, as seen in its above-market 9.1% annual sales growth over the last two years
2. Superior product capabilities and pricing power are reflected in its best-in-class gross margin of 45.1%
3. Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue

Acuity Brands is trading at $289.62 per share, or 14.4x 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

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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.