A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.

Luckily for you, we built StockStory to help you separate the good from the bad. That said, here are two cash-producing companies that reinvest wisely to drive long-term success and one that may struggle to keep up.

One Stock to Sell:

Rockwell Automation (ROK)

Trailing 12-Month Free Cash Flow Margin: 14.4%

One of the first companies to address industrial automation, Rockwell Automation (NYSE: ROK) sells products that help customers extract more efficiency from their machinery.

Why Are We Cautious About ROK?

1. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
2. Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
3. Eroding returns on capital suggest its historical profit centers are aging

At $402.64 per share, Rockwell Automation trades at 32.8x forward P/E. Read our free research report to see why you should think twice about including ROK in your portfolio.

Two Stocks to Watch:

Cadence Design Systems (CDNS)

Trailing 12-Month Free Cash Flow Margin: 30%

Powering the chips behind everything from smartphones to AI accelerators for over 35 years, Cadence Design Systems (NASDAQ: CDNS) provides essential computational software, hardware, and intellectual property used by engineers to design and verify advanced electronic systems and semiconductors.

Why Should CDNS Be on Your Watchlist?

1. Software is difficult to replicate at scale and results in a best-in-class gross margin of 87.4%
2. Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
3. Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends

Cadence Design Systems is trading at $301.57 per share, or 13.2x forward price-to-sales. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.

Teledyne (TDY)

Trailing 12-Month Free Cash Flow Margin: 17.6%

Playing a role in mapping the ocean floor as we know it today, Teledyne (NYSE: TDY) offers digital imaging and instrumentation products for various industries.

Why Are We Fans of TDY?

1. Impressive 14.7% annual revenue growth over the last five years indicates it’s winning market share this cycle
2. Operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
3. TDY is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its growing cash flow gives it even more resources to deploy

Teledyne’s stock price of $679.44 implies a valuation ratio of 28.7x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.