Generating cash is essential for any business, but not all cash-rich companies are great investments. Some produce plenty of cash but fail to allocate it effectively, leading to missed opportunities.
Luckily for you, we built StockStory to help you separate the good from the bad. That said, here is one cash-producing company that reinvests wisely to drive long-term success and two that may struggle to keep up.
Two Stocks to Sell:
Laureate Education (LAUR)
Trailing 12-Month Free Cash Flow Margin: 12.9%
Founded in 1998 by Douglas L. Becker and based in Miami, Laureate Education (NASDAQ: LAUR) is a global network of higher education institutions.
Why Does LAUR Worry Us?
- Sluggish trends in its enrolled students suggest customers aren’t adopting its solutions as quickly as the company hoped
- Earnings per share have contracted by 4.3% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
Laureate Education is trading at $22.99 per share, or 15.3x forward P/E. To fully understand why you should be careful with LAUR, check out our full research report (it’s free).
Viatris (VTRS)
Trailing 12-Month Free Cash Flow Margin: 13.3%
Created through the 2020 merger of Mylan and Pfizer's Upjohn division, Viatris (NASDAQ: VTRS) is a healthcare company that develops, manufactures, and distributes branded and generic medicines across more than 165 countries worldwide.
Why Do We Pass on VTRS?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 4.8% annually over the last two years
- Revenue growth over the past five years was nullified by the company’s new share issuances as its earnings per share fell by 11.2% annually
- Negative returns on capital show management lost money while trying to expand the business, and its shrinking returns suggest its past profit sources are losing steam
At $8.98 per share, Viatris trades at 3.9x forward P/E. Read our free research report to see why you should think twice about including VTRS in your portfolio.
One Stock to Watch:
Match Group (MTCH)
Trailing 12-Month Free Cash Flow Margin: 23%
Originally started as a dial-up service before widespread internet adoption, Match (NASDAQ: MTCH) was an early innovator in online dating and today has a portfolio of apps including Tinder, Hinge, Archer, and OkCupid.
Why Are We Fans of MTCH?
- Monetization efforts are paying off as its average revenue per user has grown by 9.5% annually over the last two years
- Performance over the past three years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Strong free cash flow margin of 26% enables it to reinvest or return capital consistently
Match Group’s stock price of $32.47 implies a valuation ratio of 7x forward EV/EBITDA. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
When Trump unveiled his aggressive tariff plan in April 2024, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 5 Growth Stocks for this month. 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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