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 leverage their financial strength to beat the competition and one best left off your watchlist.
One Stock to Sell:
Deere (DE)
Trailing 12-Month Free Cash Flow Margin: 17.5%
Revolutionizing agriculture with the first self-polishing cast-steel plow in the 1800s, Deere (NYSE: DE) manufactures and distributes advanced agricultural, construction, forestry, and turf care equipment.
Why Should You Sell DE?
- Sales tumbled by 14% annually over the last two years, showing market trends are working against its favor during this cycle
- Performance over the past two years shows each sale was less profitable as its earnings per share dropped by 17.8% annually, worse than its revenue
- 6× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Deere’s stock price of $503.24 implies a valuation ratio of 25.7x forward P/E. To fully understand why you should be careful with DE, check out our full research report (it’s free).
Two Stocks to Buy:
Cloudflare (NET)
Trailing 12-Month Free Cash Flow Margin: 10.4%
Founded by two grad students of Harvard Business School, Cloudflare (NYSE: NET) is a software-as-a-service platform that helps improve the security, reliability, and loading times of internet applications.
Why Are We Backing NET?
- Billings growth has averaged 27.9% over the last year, indicating a healthy pipeline of new contracts that should drive future revenue increases
- Revenue outlook for the upcoming 12 months is outstanding and shows it’s on track to gain market share
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
At $186.71 per share, Cloudflare trades at 29.1x forward price-to-sales. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Comfort Systems (FIX)
Trailing 12-Month Free Cash Flow Margin: 7%
Formed through the merger of 12 companies, Comfort Systems (NYSE: FIX) provides mechanical and electrical contracting services.
Why Will FIX Beat the Market?
- Backlog has averaged 30.5% growth over the past two years, showing it has a pipeline of unfulfilled orders that will support revenue in the future
- Earnings per share grew by 67.6% annually over the last two years and trumped its peers
- Returns on capital are climbing as management makes more lucrative bets
Comfort Systems is trading at $535 per share, or 28.9x forward P/E. Is now a good time to buy? Find out in our full 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 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-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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