While strong cash flow is a key indicator of stability, it doesn’t always translate to superior returns. Some cash-heavy businesses struggle with inefficient spending, slowing demand, or weak competitive positioning.
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 leverages its financial strength to beat its competitors and two that may struggle to keep up.
Two Stocks to Sell:
Church & Dwight (CHD)
Trailing 12-Month Free Cash Flow Margin: 16.7%
Best known for its Arm & Hammer baking soda, Church & Dwight (NYSE: CHD) is a household and personal care products company with a vast portfolio that spans laundry detergent to toothbrushes to hair removal creams.
Why Are We Cautious About CHD?
- 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 growth of 4.1% for the next 12 months suggests sluggish demand
- Earnings per share lagged its peers over the last three years as they only grew by 4.7% annually
At $84.93 per share, Church & Dwight trades at 23.2x forward P/E. Dive into our free research report to see why there are better opportunities than CHD.
SS&C (SSNC)
Trailing 12-Month Free Cash Flow Margin: 21.1%
Founded in 1986 as a bridge between technology and financial services, SS&C Technologies (NASDAQ: SSNC) provides software and software-enabled services that help financial firms and healthcare organizations automate complex business processes.
Why Are We Wary of SSNC?
- Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 1.3 percentage points
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 4.1 percentage points
- Low returns on capital reflect management’s struggle to allocate funds effectively
SS&C’s stock price of $84.41 implies a valuation ratio of 13.1x forward P/E. To fully understand why you should be careful with SSNC, check out our full research report (it’s free for active Edge members).
One Stock to Buy:
HCA Healthcare (HCA)
Trailing 12-Month Free Cash Flow Margin: 10.9%
With roots dating back to 1968 and a network spanning 20 states, HCA Healthcare (NYSE: HCA) operates a network of 190 hospitals and 150+ outpatient facilities providing a full range of medical services across the US and England.
Why Will HCA Beat the Market?
- Unparalleled scale of $74.37 billion in revenue gives it negotiating leverage and staying power in an industry with high barriers to entry
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Free cash flow margin grew by 11.2 percentage points over the last five years, giving the company more chips to play with
HCA Healthcare is trading at $467.55 per share, or 16.1x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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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