
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 reinvest wisely to drive long-term success and one that may face some trouble.
One Stock to Sell:
General Motors (GM)
Trailing 12-Month Free Cash Flow Margin: 7.8%
Founded in 1908 by William C. Durant, General Motors (NYSE: GM) offers a range of vehicles and automobiles through brands such as Chevrolet, Buick, GMC, and Cadillac.
Why Are We Hesitant About GM?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 2.1% for the last two years
- High input costs result in an inferior gross margin of 11.6% that must be offset through higher volumes
- Diminishing returns on capital suggest its earlier profit pools are drying up
General Motors is trading at $78.14 per share, or 5.7x forward P/E. Check out our free in-depth research report to learn more about why GM doesn’t pass our bar.
Two Stocks to Watch:
Netflix (NFLX)
Trailing 12-Month Free Cash Flow Margin: 23.1%
Launched by Reed Hastings as a DVD mail rental company until its famous pivot to streaming in 2007, Netflix (NASDAQ: NFLX) is a pioneering streaming content platform.
Why Will NFLX Beat the Market?
- Has the opportunity to boost monetization through new features and premium offerings as its global streaming paid memberships have grown by 15.1% annually over the last two years
- Highly efficient business model is illustrated by its impressive 31.2% EBITDA margin, and its profits increased over the last few years as it scaled
- Share buybacks catapulted its annual earnings per share growth to 50%, which outperformed its revenue gains over the last three years
At $67.07 per share, Netflix trades at 15.9x forward EV/EBITDA. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Boston Scientific (BSX)
Trailing 12-Month Free Cash Flow Margin: 17.3%
Founded in 1979 with a mission to advance less-invasive medicine, Boston Scientific (NYSE: BSX) develops and manufactures medical devices used in minimally invasive procedures across cardiovascular, urological, neurological, and gastrointestinal specialties.
Why Do We Like BSX?
- Existing business lines can expand without risky acquisitions as its organic revenue growth averaged 15.8% over the past two years
- Additional sales over the last five years increased its profitability as the 18.6% annual growth in its earnings per share outpaced its revenue
- Free cash flow margin grew by 12.3 percentage points over the last five years, giving the company more chips to play with
Boston Scientific’s stock price of $42.69 implies a valuation ratio of 13.3x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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 meet 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 (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
