1 Cash-Producing Stock for Long-Term Investors and 2 to Brush Off
While strong cash flow is a key indicator of stability, it doesn't always translate to superior returns. Some cash-heavy businesses struggle with inefficient spending, slowing demand, or weak competitive positioning.
Cash flow is valuable, but it's not everything - StockStory helps you identify the companies that truly put it to work. Keeping that in mind, here is one cash-producing company that excels at turning cash into shareholder value and two that may struggle to keep up.
Trailing 12-Month Free Cash Flow Margin: 9.3%
Operating in the emerging beauty health category, the appropriately named BeautyHealth (NASDAQ:SKIN) is a skincare company best known for its Hydrafacial product that cleanses and hydrates skin.
Why Should You Dump SKIN?
Annual revenue growth of 3.8% over the last three years was below our standards for the consumer staples sector
Historical operating losses point to an inefficient cost structure
High net-debt-to-EBITDA ratio of 10× could force the company to raise capital at unfavorable terms if market conditions deteriorate
BeautyHealth's stock price of $1.54 implies a valuation ratio of 12.2x forward EV-to-EBITDA. To fully understand why you should be careful with SKIN, check out our full research report (it's free).
Trailing 12-Month Free Cash Flow Margin: 6.8%
Creator of the famous M1 Abrahms tank, General Dynamics (NYSE:GD) develops aerospace, marine systems, combat systems, and information technology products.
Why Does GD Give Us Pause?
Backlog failed to grow over the past two years, suggesting the company may need to tweak its product roadmap and go-to-market strategy
Estimated sales growth of 3.1% for the next 12 months implies demand will slow from its two-year trend
Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 2.6 percentage points
At $279 per share, General Dynamics trades at 18.5x forward P/E. If you're considering GD for your portfolio, see our FREE research report to learn more.
Trailing 12-Month Free Cash Flow Margin: 38.8%
Founded by Brian Chesky and Joe Gebbia in their San Francisco apartment, Airbnb (NASDAQ:ABNB) is the world's largest online marketplace for lodging, primarily homestays.
Why Is ABNB a Top Pick?
Nights and Experiences Booked are rising, meaning the company can increase revenue without incurring additional customer acquisition costs if it can cross-sell additional products and features
Earnings per share have massively outperformed its peers over the last three years, increasing by 49.4% annually
Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Airbnb is trading at $127.44 per share, or 18.9x forward EV/EBITDA. Is now the time to initiate a position? Find out in our full research report, it's free.
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 9 Market-Beating Stocks. 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.
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