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.
Luckily for you, we built StockStory to help you separate the good from the bad. That said, here are two cash-producing companies that excel at turning cash into shareholder value and one that may face some trouble.
One Stock to Sell:
Carrier Global (CARR)
Trailing 12-Month Free Cash Flow Margin: 2.4%
Founded by the inventor of air conditioning, Carrier Global (NYSE: CARR) manufactures heating, ventilation, air conditioning, and refrigeration products.
Why Are We Cautious About CARR?
- 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
- Free cash flow margin dropped by 5.9 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Eroding returns on capital suggest its historical profit centers are aging
At $72.12 per share, Carrier Global trades at 23.5x forward P/E. Dive into our free research report to see why there are better opportunities than CARR.
Two Stocks to Watch:
BrightSpring Health Services (BTSG)
Trailing 12-Month Free Cash Flow Margin: 1.1%
Founded in 1974, BrightSpring Health Services (NASDAQ: BTSG) offers home health care, hospice, neuro-rehabilitation, and pharmacy services.
Why Is BTSG on Our Radar?
- Annual revenue growth of 20.9% over the last two years was superb and indicates its market share increased during this cycle
- Sales outlook for the upcoming 12 months implies the business will stay on its desirable two-year growth trajectory
- Earnings per share have grown at a respectable 6.9% annual rate over the last three years, a bit better than the industry average
BrightSpring Health Services’s stock price of $23.46 implies a valuation ratio of 37.2x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Amphenol (APH)
Trailing 12-Month Free Cash Flow Margin: 13.2%
With over 90 years of connecting the world's technologies, Amphenol (NYSE: APH) designs and manufactures connectors, cables, sensors, and interconnect systems that enable electrical and electronic connections across virtually every industry.
Why Are We Bullish on APH?
- Annual revenue growth of 15.2% over the past two years was outstanding, reflecting market share gains this cycle
- Unparalleled revenue scale of $16.78 billion gives it an edge in distribution
- Earnings growth has trumped its peers over the last five years as its EPS has compounded at 19% annually
Amphenol is trading at $85.60 per share, or 35.9x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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 176% over the last five years.
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.
