A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
Not all companies are created equal, and StockStory is here to surface the ones with real upside. That said, 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:
Wix (WIX)
Trailing 12-Month Free Cash Flow Margin: 28.6%
Founded in 2006 in Tel Aviv, Wix.com (NASDAQ: WIX) offers a free and easy to operate website building platform.
Why Do We Think Twice About WIX?
- Revenue increased by 11.5% annually over the last three years, acceptable on an absolute basis but tepid for a software company enjoying secular tailwinds
- Gross margin of 68.1% reflects its relatively high servicing costs
Wix is trading at $151.73 per share, or 4.5x forward price-to-sales. Read our free research report to see why you should think twice about including WIX in your portfolio.
Two Stocks to Watch:
Veeva Systems (VEEV)
Trailing 12-Month Free Cash Flow Margin: 41.5%
Built on top of Salesforce as one of the first vertical-focused cloud platforms, Veeva (NYSE: VEEV) provides data and customer relationship management (CRM) software for organizations in the life sciences industry.
Why Do We Watch VEEV?
- Winning new contracts that can potentially increase in value as its billings growth has averaged 14.6% over the last year
- Excellent operating margin of 27% highlights the efficiency of its business model, and it turbocharged its profits by achieving some fixed cost leverage
- VEEV is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
Veeva Systems’s stock price of $285 implies a valuation ratio of 14.9x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
Lam Research (LRCX)
Trailing 12-Month Free Cash Flow Margin: 22.1%
Founded in 1980 by David Lam, the man who pioneered semiconductor etching technology, Lam Research (NASDAQ: LRCX) is one of the leading providers of wafer fabrication equipment used to make semiconductors.
Why Does LRCX Stand Out?
- Healthy operating margin of 29.6% shows it’s a well-run company with efficient processes, and its operating leverage amplified its profits over the last five years
- Strong free cash flow margin of 26.6% enables it to reinvest or return capital consistently, and its recently improved profitability means it has even more resources to invest or distribute
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
At $86.70 per share, Lam Research trades at 22.8x forward P/E. Is now the right time to buy? See for yourself in our full 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 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.
