A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
Luckily for you, we built StockStory to help you separate the good from the bad. Keeping that in mind, here are two cash-producing companies that excel at turning cash into shareholder value and one best left off your watchlist.
One Stock to Sell:
Griffon (GFF)
Trailing 12-Month Free Cash Flow Margin: 12.4%
Initially in the defense industry, Griffon (NYSE:GFF) is a now diversified company specializing in home improvement, professional equipment, and building products.
Why Does GFF Worry Us?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 5.2% annually over the last two years
- Estimated sales growth of 1.4% for the next 12 months is soft and implies weaker demand
Griffon is trading at $66.18 per share, or 11.7x forward price-to-earnings. If you’re considering GFF for your portfolio, see our FREE research report to learn more.
Two Stocks to Watch:
BioMarin Pharmaceutical (BMRN)
Trailing 12-Month Free Cash Flow Margin: 17.1%
Pioneering treatments for conditions that often had no previous therapeutic options, BioMarin Pharmaceutical (NASDAQ:BMRN) develops and commercializes therapies that address the root causes of rare genetic disorders, particularly those affecting children.
Why Could BMRN Be a Winner?
- Annual revenue growth of 16.7% over the past two years was outstanding, reflecting market share gains this cycle
- Performance over the past five years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 30.7% outpaced its revenue gains
- Free cash flow margin grew by 18.6 percentage points over the last five years, giving the company more chips to play with
At $63.39 per share, BioMarin Pharmaceutical trades at 15.7x forward price-to-earnings. Is now a good time to buy? Find out in our full research report, it’s free.
Parker-Hannifin (PH)
Trailing 12-Month Free Cash Flow Margin: 16.6%
Founded in 1917, Parker Hannifin (NYSE:PH) is a manufacturer of motion and control systems for a wide variety of mobile, industrial and aerospace markets.
Why Do We Like PH?
- Operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
- Earnings growth has massively outpaced its peers over the last five years as its EPS has compounded at 15.8% annually
- Strong free cash flow margin of 14.9% enables it to reinvest or return capital consistently
Parker-Hannifin’s stock price of $597.80 implies a valuation ratio of 21x forward price-to-earnings. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
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 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.