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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. Keeping that in mind, here is one cash-producing company that reinvests wisely to drive long-term success and two best left off your watchlist.

Two Stocks to Sell:

Tennant (TNC)

Trailing 12-Month Free Cash Flow Margin: 4.8%

As the world’s largest manufacturer of autonomous mobile robots, Tennant (NYSE:TNC) designs, manufactures, and sells cleaning products to various sectors.

Why Is TNC Not Exciting?

1. Muted 2.3% annual revenue growth over the last five years shows its demand lagged behind its industrials peers

2. Sales are projected to tank by 1% over the next 12 months as demand evaporates

3. Free cash flow margin shrank by 7.1 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive

Tennant is trading at $70.78 per share, or 11.4x forward P/E. To fully understand why you should be careful with TNC, check out our full research report (it’s free).

Stanley Black & Decker (SWK)

Trailing 12-Month Free Cash Flow Margin: 5%

With an iconic “STANLEY” logo which has remained virtually unchanged for over a century, Stanley Black & Decker (NYSE:SWK) is a manufacturer primarily catering to the tool and outdoor equipment industry.

Why Should You Dump SWK?

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. Incremental sales over the last five years were much less profitable as its earnings per share fell by 10.6% annually while its revenue grew

3. 8.7 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position

Stanley Black & Decker’s stock price of $58.91 implies a valuation ratio of 11x forward P/E. Read our free research report to see why you should think twice about including SWK in your portfolio, it’s free.

One Stock to Watch:

Option Care Health (OPCH)

Trailing 12-Month Free Cash Flow Margin: 6.7%

With a nationwide network of 177 locations serving 43 states and a team of over 4,500 clinicians, Option Care Health (NASDAQ:OPCH) is the largest independent provider of home and alternate site infusion services, delivering medications and clinical support to patients across the United States.