A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. That said, here are two cash-producing companies that leverage their financial strength to beat the competition and one that may face some trouble.
One Stock to Sell:
Nordson (NDSN)
Trailing 12-Month Free Cash Flow Margin: 24.6%
Founded in 1954, Nordson Corporation (NASDAQ: NDSN) manufactures dispensing equipment and industrial adhesives, sealants and coatings.
Why Are We Hesitant About NDSN?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Estimated sales growth of 5.1% for the next 12 months is soft and implies weaker demand
- Eroding returns on capital suggest its historical profit centers are aging
Nordson is trading at $310.48 per share, or 25.8x forward P/E. To fully understand why you should be careful with NDSN, check out our full research report (it’s free).
Two Stocks to Watch:
MACOM (MTSI)
Trailing 12-Month Free Cash Flow Margin: 17.5%
Founded in the 1950s as Microwave Associates, a communications supplier to the US Army Signal Corp, today MACOM Technology Solutions (NASDAQ: MTSI) is a provider of analog chips used in optical, wireless, and satellite networks.
Why Does MTSI Stand Out?
- Impressive 30.9% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Sales outlook for the upcoming 12 months calls for 49.6% growth, an acceleration from its two-year trend
- Earnings per share have comfortably outperformed the peer group average over the last five years, increasing by 18.1% annually
At $313.05 per share, MACOM trades at 36.6x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Napco (NSSC)
Trailing 12-Month Free Cash Flow Margin: 28.6%
Protecting everything from schools to government facilities since 1969, Napco Security Technologies (NASDAQ: NSSC) manufactures electronic security devices, access control systems, and communication services for intrusion and fire alarm systems.
Why Will NSSC Beat the Market?
- Annual revenue growth of 14.2% over the past five years was outstanding, reflecting market share gains this cycle
- Robust free cash flow margin of 19.8% gives it many options for capital deployment, and its improved cash conversion implies it’s becoming a less capital-intensive business
- Improving returns on capital reflect management’s ability to monetize investments
Napco’s stock price of $41.36 implies a valuation ratio of 26.1x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
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.
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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-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
