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.

Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. That said, here is one cash-producing company that reinvests wisely to drive long-term success and two that may struggle to keep up.

Two Industrials Stocks to Sell:

Global Industrial (GIC)

Trailing 12-Month Free Cash Flow Margin: 5.4%

Formerly known as Systemax, Global Industrial (NYSE: GIC) distributes industrial and commercial products to businesses and institutions.

Why Should You Sell GIC?

1. Muted 4% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
2. Flat earnings per share over the last two years underperformed the sector average
3. Waning returns on capital imply its previous profit engines are losing steam

Global Industrial is trading at $30.86 per share, or 15.9x forward P/E. Check out our free in-depth research report to learn more about why GIC doesn’t pass our bar.

Union Pacific (UNP)

Trailing 12-Month Free Cash Flow Margin: 9.4%

Part of the transcontinental railroad project, Union Pacific (NYSE: UNP) is a freight transportation company that operates a major railroad network.

Why Do We Steer Clear of UNP?

1. Sales stagnated over the last two years and signal the need for new growth strategies
2. Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 3.4%
3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 6.8 percentage points

Union Pacific’s stock price of $244.40 implies a valuation ratio of 20.2x forward P/E. If you’re considering UNP for your portfolio, see our FREE research report to learn more.

One Industrials Stock to Watch:

Distribution Solutions (DSGR)

Trailing 12-Month Free Cash Flow Margin: 2.2%

Founded in 1952, Distribution Solutions (NASDAQ: DSGR) provides supply chain solutions and distributes industrial, safety, and maintenance products to various industries.

Why Are We Positive On DSGR?

1. Annual revenue growth of 39.4% over the past four years was outstanding, reflecting market share gains this cycle
2. Healthy unit economics are reflected in its 33.5% gross margin and give it more money to invest in marketing and R&D
3. Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue

At $19.79 per share, Distribution Solutions trades at 13.6x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.

Stocks We Like Even More

WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don't just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.

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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 Exlservice (+354% five-year return). Find your next big winner with StockStory today.