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 are two cash-producing companies that excel at turning cash into shareholder value and one best left off your watchlist.
One Stock to Sell:
El Pollo Loco (LOCO)
Trailing 12-Month Free Cash Flow Margin: 4.5%
With a name that translates into ‘The Crazy Chicken’, El Pollo Loco (NASDAQ:LOCO) is a fast food chain known for its citrus-marinated, fire-grilled chicken recipe that hails from the coastal town of Sinaloa, Mexico.
Why Are We Out on LOCO?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new diners into its restaurants
- Smaller revenue base of $480.8 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Estimated sales growth of 3.7% for the next 12 months is soft and implies weaker demand
El Pollo Loco’s stock price of $10.50 implies a valuation ratio of 12.1x forward P/E. Read our free research report to see why you should think twice about including LOCO in your portfolio.
Two Stocks to Watch:
TJX (TJX)
Trailing 12-Month Free Cash Flow Margin: 7.5%
Initially based on a strategy of buying excess inventory from manufacturers or other retailers, TJX (NYSE:TJX) is an off-price retailer that sells brand-name apparel and other goods at prices much lower than department stores.
Why Does TJX Catch Our Eye?
- Same-store sales growth averaged 4% over the past two years, showing it’s bringing new and repeat shoppers into its stores
- Massive revenue base of $58.98 billion makes up for its weaker gross margin and makes it a household name that influences purchasing decisions
- ROIC punches in at 27.9%, illustrating management’s expertise in identifying profitable investments, and its returns are growing as it capitalizes on even better market opportunities
At $155.63 per share, TJX trades at 31.4x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
NCR Atleos (NATL)
Trailing 12-Month Free Cash Flow Margin: 1.3%
Spun off from NCR Voyix in 2023 to focus exclusively on self-service banking technology, NCR Atleos (NYSE:NATL) provides self-directed banking solutions including ATM and interactive teller machine technology, software, services, and a surcharge-free ATM network for financial institutions and retailers.
Why Are We Bullish on NATL?
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 82% over the last two years outstripped its revenue performance
NCR Atleos is trading at $38.76 per share, or 8.3x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .
Stocks We Like Even More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out 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-micro-cap company Kadant (+351% 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.