Generating cash is essential for any business, but not all cash-rich companies are great investments. Some produce plenty of cash but fail to allocate it effectively, leading to missed opportunities.
Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. That said, here is one cash-producing company that leverages its financial strength to beat its competitors and two best left off your watchlist.
Two Stocks to Sell:
Target (TGT)
Trailing 12-Month Free Cash Flow Margin: 4.1%
With a higher focus on style and aesthetics compared to other large general merchandise retailers, Target (NYSE:TGT) serves the suburban consumer who is looking for a wide range of products under one roof.
Why Are We Cautious About TGT?
- Sales were flat over the last three years, indicating it’s failed to expand its business
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Gross margin of 28.1% is an output of its commoditized inventory
Target is trading at $165.49 per share, or 17.7x forward P/E. To fully understand why you should be careful with TGT, check out our full research report (it’s free).
Helix Energy Solutions (HLX)
Trailing 12-Month Free Cash Flow Margin: 18.1%
Playing a pivotal role in the 2010 Macondo oil spill response with its Q4000 vessel, Helix Energy Solutions (NYSE:HLX) provides specialized services to extend the life of offshore oil and gas wells and decommission aging infrastructure.
Why Does HLX Worry Us?
- Modest revenue base of $1.30 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- Gross margin of 13.9% is below its competitors, leaving less money to invest in exploration and production
Helix Energy Solutions’s stock price of $10.18 implies a valuation ratio of 18.1x forward P/E. Dive into our free research report to see why there are better opportunities than HLX.
One Stock to Buy:
MasTec (MTZ)
Trailing 12-Month Free Cash Flow Margin: 1.5%
Involved in the 1996 Olympic Games MasTec (NYSE:MTZ) is an infrastructure construction company that specializes in the telecommunications, energy, and utility industries.
What Makes MTZ Stand Out?
- Backlog has averaged 24.9% growth over the past two years, showing it has a pipeline of unfulfilled orders that will support revenue in the future
- Demand for the next 12 months is expected to accelerate above its two-year trend as Wall Street forecasts robust revenue growth of 25.1%
- Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 82.9% annually
At $249.50 per share, MasTec trades at 23x 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
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 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-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.