2 Cash-Producing Stocks Worth Your Attention and 1 Facing Challenges

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. 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:

Amdocs (DOX)

Trailing 12-Month Free Cash Flow Margin: 16.5%

Powering the digital experiences of approximately 400 communications companies worldwide, Amdocs (NASDAQ:DOX) provides software and services that help telecommunications and media companies manage customer relationships, monetize services, and automate network operations.

Why Are We Hesitant About DOX?

1. Annual sales declines of 3.8% for the past two years show its products and services struggled to connect with the market during this cycle
2. Projected sales growth of 3.2% for the next 12 months suggests sluggish demand
3. Earnings per share lagged its peers over the last two years as they only grew by 8.9% annually

Amdocs’s stock price of $65.44 implies a valuation ratio of 8.5x forward P/E. Read our free research report to see why you should think twice about including DOX in your portfolio.

Two Stocks to Watch:

Wingstop (WING)

Trailing 12-Month Free Cash Flow Margin: 15.2%

The passion project of two chicken wing aficionados in Texas, Wingstop (NASDAQ:WING) is a popular fast-food chain known for its flavorful and crispy chicken wings offered in a variety of sauces and seasonings.

Why Are We Bullish on WING?

1. Average same-store sales growth of 8.6% over the past two years indicates its restaurants are resonating with diners
2. Disciplined cost controls and effective management resulted in a strong two-year operating margin of 26.1%
3. Robust free cash flow margin of 16% gives it many options for capital deployment

Wingstop is trading at $191.32 per share, or 42.9x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.

Northwest Pipe (NWPX)

Trailing 12-Month Free Cash Flow Margin: 9%

Playing a large role in the Integrated Pipeline (IPL) project in Texas to deliver ~350 million gallons of water per day, Northwest Pipe (NASDAQ:NWPX) is a manufacturer of pipeline systems for water infrastructure.

Why Do We Like NWPX?

1. Impressive 13% annual revenue growth over the last five years indicates it’s winning market share this cycle
2. Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
3. Free cash flow margin grew by 14.7 percentage points over the last five years, giving the company more chips to play with

At $83.84 per share, Northwest Pipe trades at 21.3x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.

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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 Exlservice (+354% five-year return). Find your next big winner with StockStory today.