2 Cash-Producing Stocks for Long-Term Investors and 1 to Steer Clear Of

Yahoo

30-05-2025

A company that generates cash isn't automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
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 excel at turning cash into shareholder value and one best left off your watchlist.
Trailing 12-Month Free Cash Flow Margin: 9.1%
Known for its flavorful beverages challenging the status quo, Boston Beer (NYSE:SAM) is a pioneer in craft brewing and a symbol of American innovation in the alcoholic beverage industry.
Why Does SAM Worry Us?
Muted 1.7% annual revenue growth over the last three years shows its demand lagged behind its consumer staples peers
Smaller revenue base of $2.04 billion means it hasn't achieved the economies of scale that some industry juggernauts enjoy
Demand will likely fall over the next 12 months as Wall Street expects flat revenue
Boston Beer is trading at $231.24 per share, or 22.7x forward P/E. To fully understand why you should be careful with SAM, check out our full research report (it's free).
Trailing 12-Month Free Cash Flow Margin: 22.5%
Founded in 1949, Grand Canyon Education (NASDAQ:LOPE) is an educational services provider known for its operation at Grand Canyon University.
Why Are We Positive On LOPE?
Disciplined cost controls and effective management resulted in a strong two-year operating margin of 26.5%
ROIC punches in at 30.2%, illustrating management's expertise in identifying profitable investments, and its rising returns show it's making even more lucrative bets
At $192.01 per share, Grand Canyon Education trades at 21.9x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it's free.
Trailing 12-Month Free Cash Flow Margin: 26.7%
With roots dating back to 1891 and a portfolio that includes the blockbuster cancer immunotherapy Keytruda, Merck (NYSE:MRK) develops and sells prescription medicines, vaccines, and animal health products across oncology, infectious diseases, cardiovascular, and other therapeutic areas.
Why Are We Fans of MRK?
Unparalleled scale of $63.92 billion in revenue gives it negotiating leverage and staying power in an industry with high barriers to entry
Free cash flow margin expanded by 11.2 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
Industry-leading 15.6% return on capital demonstrates management's skill in finding high-return investments
Merck's stock price of $76.27 implies a valuation ratio of 8.4x forward P/E. Is now the right time to buy? Find out in our full research report, it's free.
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 9 Market-Beating Stocks. 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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free.