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.
Not all companies are created equal, and StockStory is here to surface the ones with real upside. Keeping that in mind, 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:
Organon (OGN)
Trailing 12-Month Free Cash Flow Margin: 12.3%
Spun off from Merck in 2021 to create a company dedicated to addressing unmet needs in women's health, Organon (NYSE: OGN) is a global healthcare company focused on improving women's health through prescription therapies, medical devices, biosimilars, and established medicines.
Why Should You Sell OGN?
- Annual sales declines of 3.8% for the past five years show its products and services struggled to connect with the market during this cycle
- Earnings per share have contracted by 18% annually over the last four years, a headwind for returns as stock prices often echo long-term EPS performance
- 28.9 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
Organon is trading at $9.95 per share, or 2.6x forward P/E. If you’re considering OGN for your portfolio, see our FREE research report to learn more.
Two Stocks to Watch:
Ulta (ULTA)
Trailing 12-Month Free Cash Flow Margin: 9.1%
Offering high-end prestige brands as well as lower-priced, mass-market ones, Ulta Beauty (NASDAQ: ULTA) is an American retailer that sells makeup, skincare, haircare, and fragrance products.
Why Do We Like ULTA?
- Same-store sales growth lends it the confidence to gradually expand its store base so it can reach more customers
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures, and its returns are climbing as it finds even more attractive growth opportunities
Ulta’s stock price of $464.49 implies a valuation ratio of 19.7x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Republic Services (RSG)
Trailing 12-Month Free Cash Flow Margin: 14.7%
Processing several million tons of recyclables annually, Republic (NYSE: RSG) provides waste management services for residences, companies, and municipalities.
Why Is RSG Interesting?
- Solid 9.3% annual revenue growth over the last five years indicates its offering’s solve complex business issues
- Healthy operating margin of 18.6% shows it’s a well-run company with efficient processes, and its profits increased over the last five years as it scaled
- Strong free cash flow margin of 13.5% enables it to reinvest or return capital consistently
At $250.97 per share, Republic Services trades at 35.7x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Growth Stocks for this month. 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 Comfort Systems (+782% 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
