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.

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 face some trouble.

Two Stocks to Sell:

Reynolds (REYN)

Trailing 12-Month Free Cash Flow Margin: 8.2%

Best known for its aluminum foil, Reynolds $(REYN)$ is a household products company whose products focus on food storage, cooking, and waste.

Why Are We Out on REYN?

1. Declining unit sales over the past two years show it’s struggled to move its products and had to rely on price increases
2. Projected sales for the next 12 months are flat and suggest demand will be subdued
3. Capital intensity has ramped up over the last year as its free cash flow margin decreased by 5.8 percentage points

At $22.85 per share, Reynolds trades at 14.1x forward P/E. Check out our free in-depth research report to learn more about why REYN doesn’t pass our bar.

Progyny (PGNY)

Trailing 12-Month Free Cash Flow Margin: 15.3%

Pioneering a data-driven approach to family building that has achieved an industry-leading patient satisfaction score of +80, Progyny $(PGNY)$ provides comprehensive fertility and family building benefits solutions to employers, helping employees access quality fertility treatments and support services.

Why Do We Think Twice About PGNY?

1. Revenue base of $1.24 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale
2. Below-average returns on capital indicate management struggled to find compelling investment opportunities

Progyny’s stock price of $22.85 implies a valuation ratio of 13.6x forward P/E. Dive into our free research report to see why there are better opportunities than PGNY.

One Stock to Watch:

AZZ $(AZZ.SI)$

Trailing 12-Month Free Cash Flow Margin: 24.2%

Responsible for projects like nuclear facilities, AZZ $(AZZ)$ is a provider of metal coating and power infrastructure solutions.

Why Could AZZ Be a Winner?

1. Excellent operating margin of 14.7% highlights the efficiency of its business model, and it turbocharged its profits by achieving some fixed cost leverage
2. Additional sales over the last two years increased its profitability as the 24.5% annual growth in its earnings per share outpaced its revenue
3. Free cash flow margin grew by 13.5 percentage points over the last five years, giving the company more chips to play with

AZZ is trading at $110.25 per share, or 18.2x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.

Stocks We Like Even More

Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today

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