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 is one cash-producing company that leverages its financial strength to beat its competitors and two that may struggle to keep up.
Two Stocks to Sell:
Himax (HIMX)
Trailing 12-Month Free Cash Flow Margin: 15%
Taiwan-based Himax Technologies (NASDAQ: HIMX) is a leading manufacturer of display driver chips and timing controllers used in TVs, laptops, and mobile phones.
Why Does HIMX Worry Us?
- Annual sales declines of 3.5% for the past two years show its products and services struggled to connect with the market during this cycle
- Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
- Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 30.6%
Himax is trading at $9.40 per share, or 25.2x forward P/E. To fully understand why you should be careful with HIMX, check out our full research report (it’s free for active Edge members).
MasterCraft (MCFT)
Trailing 12-Month Free Cash Flow Margin: 9.9%
Started by a waterskiing instructor, MasterCraft (NASDAQ: MCFT) specializes in designing, manufacturing, and selling sport boats.
Why Does MCFT Fall Short?
- Demand for its offerings was relatively low as its number of boats sold has underwhelmed
- Sales were less profitable over the last five years as its earnings per share fell by 7% annually, worse than its revenue declines
- Eroding returns on capital suggest its historical profit centers are aging
MasterCraft’s stock price of $20.06 implies a valuation ratio of 15.9x forward P/E. Read our free research report to see why you should think twice about including MCFT in your portfolio.
One Stock to Watch:
DoubleVerify (DV)
Trailing 12-Month Free Cash Flow Margin: 21%
Using advanced analytics to evaluate over 17 billion digital ad transactions daily, DoubleVerify (NYSE: DV) provides AI-powered technology that verifies digital ads are viewable, fraud-free, brand-suitable, and displayed in the intended geographic location.
Why Could DV Be a Winner?
- Market share has increased as its 27.9% annual revenue growth over the last five years was exceptional
- Prominent and differentiated software results in a top-tier gross margin of 82.1%
- Well-designed software integrates seamlessly with other workflows, enabling swift payback periods on marketing expenses and customer growth at scale
At $11.38 per share, DoubleVerify trades at 2.4x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out 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 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. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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