1 Cash-Producing Stock to Consider Right Now and 2 to Question
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.
Not all companies are created equal, and StockStory is here to surface the ones with real upside. Keeping that in mind, here is one cash-producing company that reinvests wisely to drive long-term success and two best left off your watchlist.
Trailing 12-Month Free Cash Flow Margin: 19%
Originally a subsidiary of Pioneer-Standard Electronics that distributed electronic components, Agilysys (NASDAQ:AGYS) offers a software-as-service platform that helps hotels, resorts, restaurants, and other hospitality businesses manage their operations and workflows.
Why Does AGYS Worry Us?
Revenue increased by 19.2% annually over the last three years, acceptable on an absolute basis but tepid for a software company enjoying secular tailwinds
Gross margin of 62.4% reflects its relatively high servicing costs
Free cash flow margin is forecasted to shrink by 1.1 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
Agilysys's stock price of $105.60 implies a valuation ratio of 10x forward price-to-sales. Read our free research report to see why you should think twice about including AGYS in your portfolio, it's free.
Trailing 12-Month Free Cash Flow Margin: 13.3%
Founded by two brothers from Texas, YETI (NYSE:YETI) specializes in durable outdoor goods including coolers, drinkware, and other gear tailored to adventure enthusiasts.
Why Is YETI Not Exciting?
Sales trends were unexciting over the last two years as its 7.1% annual growth was below the typical consumer discretionary company
Estimated sales growth of 3.4% for the next 12 months implies demand will slow from its two-year trend
Shrinking returns on capital suggest that increasing competition is eating into the company's profitability
At $32.05 per share, YETI trades at 11.8x forward P/E. To fully understand why you should be careful with YETI, check out our full research report (it's free).
Trailing 12-Month Free Cash Flow Margin: 5.1%
Known for projects like the construction of Guantanamo Bay, KBR provides professional services and technologies, specializing in engineering, construction, and government services sectors.
Why Are We Fans of KBR?
Offerings and unique value proposition resonate with customers, as seen in its above-market 10.3% annual sales growth over the last two years
Operating margin expanded by 4.9 percentage points over the last five years as it scaled and became more efficient
Share buybacks catapulted its annual earnings per share growth to 15.8%, which outperformed its revenue gains over the last five years
KBR is trading at $52 per share, or 13.5x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it's free.
The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 6 Stocks for this week. 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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free.
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