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. That said, 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:
BeautyHealth (SKIN)
Trailing 12-Month Free Cash Flow Margin: 10.9%
Operating in the emerging beauty health category, the appropriately named BeautyHealth (NASDAQ: SKIN) is a skincare company best known for its Hydrafacial product that cleanses and hydrates skin.
Why Do We Avoid SKIN?
- Annual revenue declines of 1.6% over the last three years indicate problems with its market positioning
- Revenue base of $310.1 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Poor expense management has led to operating margin losses
At $2.30 per share, BeautyHealth trades at 15.1x forward EV-to-EBITDA. If you’re considering SKIN for your portfolio, see our FREE research report to learn more.
RE/MAX (RMAX)
Trailing 12-Month Free Cash Flow Margin: 11.4%
Short for Real Estate Maximums, RE/MAX (NYSE: RMAX) operates a real estate franchise network spanning over 100 countries and territories.
Why Do We Steer Clear of RMAX?
- Number of agents has disappointed over the past two years, indicating weak demand for its offerings
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 6.7% annually
- Underwhelming 0.2% return on capital reflects management’s difficulties in finding profitable growth opportunities
RE/MAX’s stock price of $9.50 implies a valuation ratio of 7x forward P/E. Check out our free in-depth research report to learn more about why RMAX doesn’t pass our bar.
One Stock to Watch:
Amgen (AMGN)
Trailing 12-Month Free Cash Flow Margin: 30.4%
Founded in 1980 during the early days of the biotechnology revolution, Amgen (NASDAQ: AMGN) is a biotechnology company that discovers, develops, and manufactures innovative medicines to treat serious illnesses like cancer, osteoporosis, and autoimmune diseases.
Why Do We Like AMGN?
- Annual revenue growth of 14.6% over the last two years beat the sector average and underscores the unique value of its offerings
- Economies of scale give it some operating leverage when demand rises
- Robust free cash flow margin of 29.8% gives it many options for capital deployment
Amgen is trading at $278.53 per share, or 13.2x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check 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 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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