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.
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 excels at turning cash into shareholder value and two that may face some trouble.
Two Stocks to Sell:
Trimble (TRMB)
Trailing 12-Month Free Cash Flow Margin: 11.8%
Playing a role in the construction of the Paris Grand, Trimble (NASDAQ: TRMB) offers geospatial devices and technology to the agriculture, construction, transportation, and logistics industries.
Why Do We Pass on TRMB?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Projected sales decline of 2.5% for the next 12 months points to an even tougher demand environment ahead
- Free cash flow margin shrank by 9.6 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Trimble’s stock price of $71.88 implies a valuation ratio of 23.9x forward P/E. Read our free research report to see why you should think twice about including TRMB in your portfolio.
Integer Holdings (ITGR)
Trailing 12-Month Free Cash Flow Margin: 6.4%
With its name reflecting the mathematical term for "whole" or "complete," Integer Holdings (NYSE: ITGR) is a medical device outsource manufacturer that produces components and systems for cardiac, vascular, neurological, and other medical applications.
Why Are We Cautious About ITGR?
- Sales trends were unexciting over the last five years as its 6.5% annual growth was below the typical healthcare company
- Subscale operations are evident in its revenue base of $1.75 billion, meaning it has fewer distribution channels than its larger rivals
- Free cash flow margin dropped by 7.7 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Integer Holdings is trading at $120.17 per share, or 19.1x forward P/E. If you’re considering ITGR for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Inspire Medical Systems (INSP)
Trailing 12-Month Free Cash Flow Margin: 9.4%
Offering an alternative for the millions who struggle with traditional CPAP machines, Inspire Medical Systems (NYSE: INSP) develops and sells an implantable neurostimulation device that treats obstructive sleep apnea by stimulating nerves to keep airways open during sleep.
Why Is INSP a Top Pick?
- Steady expansion of new domestic medical centers reflects a push to reach more customers in underpenetrated markets
- Earnings per share have massively outperformed its peers over the last five years, increasing by 26.7% annually
- Free cash flow margin jumped by 48.2 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
At $137.91 per share, Inspire Medical Systems trades at 50.2x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our 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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.
