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.
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 excels at turning cash into shareholder value and two best left off your watchlist.
Two Stocks to Sell:
GE HealthCare (GEHC)
Trailing 12-Month Free Cash Flow Margin: 7.9%
Spun off from industrial giant General Electric in 2023 after over a century as its healthcare division, GE HealthCare (NASDAQ: GEHC) provides medical imaging equipment, patient monitoring systems, diagnostic pharmaceuticals, and AI-enabled healthcare solutions to hospitals and clinics worldwide.
Why Does GEHC 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
- Performance over the past four years shows its incremental sales were much less profitable, as its earnings per share fell by 3.7% annually
- 9.6 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
At $74.09 per share, GE HealthCare trades at 18x forward P/E. Dive into our free research report to see why there are better opportunities than GEHC.
Allstate (ALL)
Trailing 12-Month Free Cash Flow Margin: 13.3%
Born from a Sears, Roebuck & Co. initiative during the Great Depression with its famous "You're in good hands" slogan, Allstate (NYSE: ALL) is one of America's largest personal property and casualty insurers, offering protection for autos, homes, and personal property.
Why Are We Hesitant About ALL?
- Day-to-day expenses have swelled relative to revenue over the last four years as its combined ratio increased by 4.8 percentage points
- Book value per share stagnated over the last five years, limiting its ability to leverage its balance sheet to make additional investments
- Underwhelming 11.6% return on equity reflects management’s difficulties in finding profitable growth opportunities
Allstate’s stock price of $204.72 implies a valuation ratio of 2.4x forward P/B. If you’re considering ALL for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
Leonardo DRS (DRS)
Trailing 12-Month Free Cash Flow Margin: 6.9%
Developing submarine detection systems for the U.S. Navy, Leonardo DRS (NASDAQ: DRS) is a provider of defense systems, electronics, and military support services.
Why Is DRS on Our Radar?
- Market share has increased this cycle as its 13.6% annual revenue growth over the last two years was exceptional
- Average backlog growth of 50.1% over the past two years shows it has a steady sales pipeline that will drive future orders
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 19.2% annually, topping its revenue gains
Leonardo DRS is trading at $42.06 per share, or 36.6x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at 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-small-cap company Comfort Systems (+782% 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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