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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 excels at turning cash into shareholder value and two that may struggle to keep up.

Two Stocks to Sell:

Lincoln Electric (LECO)

Trailing 12-Month Free Cash Flow Margin: 13.3%

Headquartered in Ohio, Lincoln Electric (NASDAQ:LECO) manufactures and sells welding equipment for various industries.

Why Does LECO Fall Short?

1. Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth

2. Projected sales growth of 1.9% for the next 12 months suggests sluggish demand

3. Earnings growth underperformed the sector average over the last two years as its EPS grew by just 5.4% annually

Lincoln Electric’s stock price of $181.48 implies a valuation ratio of 19.2x forward P/E. If you’re considering LECO for your portfolio, see our FREE research report to learn more.

Schneider (SNDR)

Trailing 12-Month Free Cash Flow Margin: 5.9%

Employing thousands of drivers across the country to make deliveries, Schneider (NYSE:SNDR) makes full truckload and intermodal deliveries regionally and across borders.

Why Should You Sell SNDR?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 8.5% annually over the last two years

2. Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 10.3% annually

3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

At $22.40 per share, Schneider trades at 22.8x forward P/E. Check out our free in-depth research report to learn more about why SNDR doesn’t pass our bar.

One Stock to Watch:

MongoDB (MDB)

Trailing 12-Month Free Cash Flow Margin: 5.7%

Started in 2007 by the team behind Google’s ad platform, DoubleClick, MongoDB offers database-as-a-service that helps companies store large volumes of semi-structured data.

Why Are We Positive On MDB?

1. Customers view its software as mission-critical to their operations as its ARR has averaged 25.4% growth over the last year

2. Platform plays a pivotal role in customer workflows as its net revenue retention rate punches in at 119%

3. Free cash flow margin is anticipated to expand by 5.1 percentage points over the next year, providing additional flexibility for investments and share buybacks/dividends