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1 Cash-Producing Stock to Target This Week and 2 That Underwhelm

AEIS Cover Image

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 is one cash-producing company that reinvests wisely to drive long-term success and two best left off your watchlist.

Two Stocks to Sell:

Advanced Energy (AEIS)

Trailing 12-Month Free Cash Flow Margin: 7.5%

Pioneering technologies for radio frequency power delivery, Advanced Energy (NASDAQ: AEIS) provides power supplies, thermal management systems, and measurement and control instruments for various manufacturing processes.

Why Do We Avoid AEIS?

  1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 5.9% annually over the last two years
  2. Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable
  3. Waning returns on capital imply its previous profit engines are losing steam

At $182.37 per share, Advanced Energy trades at 28.2x forward P/E. Dive into our free research report to see why there are better opportunities than AEIS.

Insteel (IIIN)

Trailing 12-Month Free Cash Flow Margin: 8.6%

Growing from a small wire manufacturer to one of the largest in the U.S., Insteel (NYSE: IIIN) provides steel wire reinforcing products for concrete.

Why Is IIIN Not Exciting?

  1. Sales tumbled by 7% annually over the last two years, showing market trends are working against its favor during this cycle
  2. Sales were less profitable over the last two years as its earnings per share fell by 19.5% annually, worse than its revenue declines
  3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

Insteel’s stock price of $36.91 implies a valuation ratio of 13.1x forward P/E. Read our free research report to see why you should think twice about including IIIN in your portfolio.

One Stock to Buy:

Merck (MRK)

Trailing 12-Month Free Cash Flow Margin: 23.1%

With roots dating back to 1891 and a portfolio that includes the blockbuster cancer immunotherapy Keytruda, Merck (NYSE: MRK) develops and sells prescription medicines, vaccines, and animal health products across oncology, infectious diseases, cardiovascular, and other therapeutic areas.

Why Will MRK Beat the Market?

  1. Massive revenue base of $63.62 billion in a highly regulated sector makes the company difficult to replace, giving it meaningful negotiating power
  2. Adjusted operating profits increased over the last two years as the company gained some leverage on its fixed costs and became more efficient
  3. Free cash flow margin grew by 10.7 percentage points over the last five years, giving the company more chips to play with

Merck is trading at $85.88 per share, or 9.4x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free for active Edge members.

High-Quality Stocks for All Market Conditions

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking 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 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 Exlservice (+354% 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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