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. That said, here is one cash-producing company that reinvests wisely to drive long-term success and two that may struggle to keep up.

Two Stocks to Sell:

Cummins (CMI)

Trailing 12-Month Free Cash Flow Margin: 7.1%

With more than half of the heavy-duty truck market using its engines at one point, Cummins (NYSE: CMI) offers engines and power systems.

Why Does CMI Give Us Pause?

1. Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last two years
2. High input costs result in an inferior gross margin of 24.6% that must be offset through higher volumes
3. Eroding returns on capital suggest its historical profit centers are aging

Cummins’s stock price of $544.51 implies a valuation ratio of 20.3x forward P/E. To fully understand why you should be careful with CMI, check out our full research report (it’s free).

Plexus (PLXS)

Trailing 12-Month Free Cash Flow Margin: 1.8%

With over 20,000 team members across 26 global facilities, Plexus (NASDAQ: PLXS) designs, manufactures, and services complex electronic products for companies in aerospace/defense, healthcare, and industrial sectors.

Why Are We Wary of PLXS?

1. Flat sales over the last two years suggest it must find different ways to grow during this cycle
2. Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
3. Diminishing returns on capital suggest its earlier profit pools are drying up

Plexus is trading at $194.52 per share, or 24x forward P/E. Dive into our free research report to see why there are better opportunities than PLXS.

One Stock to Watch:

TaskUs (TASK)

Trailing 12-Month Free Cash Flow Margin: 6.2%

Starting as a virtual assistant service in 2008 before evolving into a global digital services provider, TaskUs (NASDAQ: TASK) provides outsourced digital services including customer experience management, content moderation, and AI data services to innovative technology companies.

Why Does TASK Stand Out?

1. Impressive 19.9% annual revenue growth over the last five years indicates it’s winning market share this cycle
2. Free cash flow margin expanded by 18.3 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
3. Returns on capital are increasing as management’s prior bets are starting to bear fruit

At $10.60 per share, TaskUs trades at 7.5x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

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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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.