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. 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:
Honeywell (HON)
Trailing 12-Month Free Cash Flow Margin: 12.4%
Originally founded in 1906 as a thermostat company, Honeywell (NASDAQ: HON) is a multinational conglomerate known for its aerospace systems, building technologies, performance materials, and safety and productivity solutions.
Why Does HON Give Us Pause?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Anticipated sales growth of 4.8% for the next year implies demand will be shaky
- Free cash flow margin shrank by 2.6 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Honeywell’s stock price of $209.20 implies a valuation ratio of 19.5x forward P/E. Dive into our free research report to see why there are better opportunities than HON.
Two Stocks to Watch:
SPX Technologies (SPXC)
Trailing 12-Month Free Cash Flow Margin: 11.5%
With roots dating back to 1912 as the Piston Ring Company, SPX Technologies (NYSE: SPXC) supplies specialized infrastructure equipment for HVAC systems and detection and measurement applications across industrial, commercial, and utility markets.
Why Could SPXC Be a Winner?
- Impressive 12.5% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Operating margin improvement of 8.1 percentage points over the last five years demonstrates its ability to scale efficiently
- Earnings growth has trumped its peers over the last two years as its EPS has compounded at 22.2% annually
At $188.04 per share, SPX Technologies trades at 28.4x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Stryker (SYK)
Trailing 12-Month Free Cash Flow Margin: 16.9%
With over 150 million patients impacted annually through its innovative healthcare technologies, Stryker (NYSE: SYK) develops and manufactures advanced medical devices and equipment across orthopedics, surgical tools, neurotechnology, and patient care solutions.
Why Does SYK Catch Our Eye?
- Core business can prosper without any help from acquisitions as its organic revenue growth averaged 10.2% over the past two years
- $23.82 billion in revenue gives its scale, which leads to bargaining power with customers because there are few trusted alternatives
- Earnings per share grew by 13.3% annually over the last five years and trumped its peers
Stryker is trading at $377.10 per share, or 27x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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 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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