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 reinvest wisely to drive long-term success and one that may face some trouble.

One Stock to Sell:

Vimeo (VMEO)

Trailing 12-Month Free Cash Flow Margin: 11.8%

Originally launched in 2004 as a platform for filmmakers seeking a high-quality alternative to YouTube, Vimeo (NASDAQ: VMEO) provides cloud-based video creation, editing, hosting, and distribution software that helps businesses and creators make, manage, and share professional-quality videos.

Why Does VMEO Give Us Pause?

1. Annual sales declines of 1.5% for the past two years show its products and services struggled to connect with the market during this cycle
2. Subscale operations are evident in its revenue base of $415.1 million, meaning it has fewer distribution channels than its larger rivals
3. Negative returns on capital show that some of its growth strategies have backfired

At $4.14 per share, Vimeo trades at 22.6x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including VMEO in your portfolio.

Two Stocks to Watch:

Vita Coco (COCO)

Trailing 12-Month Free Cash Flow Margin: 6%

Founded in 2004 followed by a 2021 IPO, The Vita Coco Company (NASDAQ: COCO) offers coconut water products that are a natural way to quench thirst.

Why Should COCO Be on Your Watchlist?

1. Stellar 8.4% growth in unit sales over the past two years demonstrates the high demand for its products
2. Earnings per share grew by 133% annually over the last three years and trumped its peers
3. Industry-leading 33.4% return on capital demonstrates management’s skill in finding high-return investments, and its returns are growing as it capitalizes on even better market opportunities

Vita Coco’s stock price of $36.30 implies a valuation ratio of 30.2x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.

OSI Systems (OSIS)

Trailing 12-Month Free Cash Flow Margin: 2.5%

With security scanners deployed at airports and borders worldwide and patient monitors used in hospitals across the globe, OSI Systems (NASDAQ: OSIS) designs and manufactures specialized electronic systems for security screening, patient monitoring, and optoelectronic applications.

Why Could OSIS Be a Winner?

1. Annual revenue growth of 18.5% over the last two years was superb and indicates its market share increased during this cycle
2. Earnings per share have massively outperformed its peers over the last two years, increasing by 27.4% annually
3. Rising returns on capital show the company is starting to reap the benefits of its past investments

OSI Systems is trading at $235.64 per share, or 23.5x 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

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 5 Strong Momentum 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 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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