A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.

Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. Keeping that in mind, here are two cash-producing companies that leverage their financial strength to beat the competition and one that may struggle to keep up.

One Stock to Sell:

Baxter (BAX)

Trailing 12-Month Free Cash Flow Margin: 2.2%

With a history dating back to 1931 and products used in over 100 countries, Baxter International (NYSE: BAX) provides essential healthcare products including dialysis therapies, IV solutions, infusion systems, surgical products, and patient monitoring technologies to hospitals and clinics worldwide.

Why Should You Dump BAX?

1. Constant currency growth was below our standards over the past two years, suggesting it might need to invest in product improvements to get back on track
2. Performance over the past five years shows each sale was less profitable, as its earnings per share fell by 4.3% annually
3. Below-average returns on capital indicate management struggled to find compelling investment opportunities

At $18.78 per share, Baxter trades at 8.5x forward P/E. Dive into our free research report to see why there are better opportunities than BAX.

Two Stocks to Watch:

Coinbase (COIN)

Trailing 12-Month Free Cash Flow Margin: 4.2%

Widely regarded as the face of crypto, Coinbase (NASDAQ: COIN) is a blockchain infrastructure company updating the financial system with its trading, staking, stablecoin, and other payment solutions.

Why Is COIN a Good Business?

1. Has the opportunity to boost monetization through new features and premium offerings as its monthly transacting users have grown by 11.7% annually over the last two years
2. Switching costs of its platform were on full display over the last two years as it not only grew engagement but also increased the average revenue per user by 55% annually
3. Earnings per share grew by 132% annually over the last two years, massively outpacing its peers

Coinbase’s stock price of $284.13 implies a valuation ratio of 25.7x forward EV/EBITDA. Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.

Berkshire Hathaway (BRK.A)

Trailing 12-Month Free Cash Flow Margin: 6.9%

Led by legendary investor Warren Buffett since 1965, transforming it from a struggling textile manufacturer into a corporate giant, Berkshire Hathaway (NYSE: BRK.A) is a diversified holding company that owns businesses across insurance, railroads, utilities, manufacturing, retail, and services sectors.

Why Do We Watch BRK.A?

1. Earnings growth has easily exceeded the peer group average over the last two years as its EPS has compounded at 18.9% annually
2. Annual tangible book value per share growth of 15.9% over the past five years was outstanding, reflecting strong capital accumulation this cycle
3. Stellar return on equity showcases management’s ability to surface highly profitable business ventures

Berkshire Hathaway is trading at $769,564 per share, or 22.8x 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

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged 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 Tecnoglass (+1,754% 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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