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. That said, here are two cash-producing companies that leverage their financial strength to beat the competition and one that may face some trouble.
One Stock to Sell:
Coty (COTY)
Trailing 12-Month Free Cash Flow Margin: 5.4%
With a portfolio boasting many household brands, Coty (NYSE: COTY) is a beauty products powerhouse spanning cosmetics, fragrances, and skincare.
Why Do We Steer Clear of COTY?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Projected sales are flat for the next 12 months, implying demand will slow from its three-year trend
- Earnings per share fell by 29.3% annually over the last three years while its revenue grew, showing its incremental sales were much less profitable
Coty is trading at $2.02 per share, or 6x forward P/E. If you’re considering COTY for your portfolio, see our FREE research report to learn more.
Two Stocks to Watch:
Monster (MNST)
Trailing 12-Month Free Cash Flow Margin: 23.6%
Founded in 2002 as a natural soda and juice company, Monster Beverage (NASDAQ: MNST) is a pioneer of the energy drink category, and its Monster Energy brand targets a young, active demographic.
Why Will MNST Beat the Market?
- Highly efficient business model is illustrated by its impressive 28.4% operating margin, and its operating leverage amplified its profits over the last year
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures, and its returns are growing as it capitalizes on even better market opportunities
Monster’s stock price of $87.44 implies a valuation ratio of 36.9x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Broadridge (BR)
Trailing 12-Month Free Cash Flow Margin: 17.1%
Processing over $10 trillion in equity and fixed income trades daily and managing proxy voting for over 800 million equity positions, Broadridge Financial Solutions (NYSE: BR) provides technology-driven solutions that power investing, governance, and communications for banks, broker-dealers, asset managers, and public companies.
Why Could BR Be a Winner?
- Annual revenue growth of 8.7% over the last five years beat the sector average and underscores the unique value of its offerings
- Free cash flow margin expanded by 10.7 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
- Returns on capital are growing as management capitalizes on its market opportunities
At $146.69 per share, Broadridge trades at 15.1x 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
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum - both boxes checked at the same time.
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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.
