Businesses with strong free cash flow tend to be more adaptable and resilient. Some of these companies shine bright by using their cash wisely to strengthen their market positions.
Identifying the most effective companies isn’t easy, and that’s why we started StockStory. Keeping that in mind, here are three cash-producing companies that reinvest wisely to drive long-term success.
Broadcom (AVGO)
Trailing 12-Month Free Cash Flow Margin: 41.6%
Originally the semiconductor division of Hewlett Packard, Broadcom (NASDAQ: AVGO) is a semiconductor conglomerate spanning wireless communications, networking, and data storage as well as infrastructure software focused on mainframes and cybersecurity.
Why Do We Love AVGO?
- Annual revenue growth of 30% over the past two years was outstanding, reflecting market share gains this cycle
- Superior product capabilities and pricing power result in a best-in-class gross margin of 76.1%
- Robust free cash flow margin of 40.8% gives it many options for capital deployment
At $359.21 per share, Broadcom trades at 46.4x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
CSW (CSW)
Trailing 12-Month Free Cash Flow Margin: 16.4%
With over two centuries of combined operations manufacturing and supplying, CSW (NASDAQ: CSW) offers special chemicals, coatings, sealants, and lubricants for various industries.
Why Will CSW Beat the Market?
- Annual revenue growth of 19.6% over the past five years was outstanding, reflecting market share gains this cycle
- Additional sales over the last five years increased its profitability as the 25.9% annual growth in its earnings per share outpaced its revenue
- Strong free cash flow margin of 15.5% enables it to reinvest or return capital consistently, and its growing cash flow gives it even more resources to deploy
CSW’s stock price of $254.84 implies a valuation ratio of 25.5x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Hims & Hers Health (HIMS)
Trailing 12-Month Free Cash Flow Margin: 5.9%
Originally launched with a focus on stigmatized conditions like hair loss and sexual health, Hims & Hers Health (NYSE: HIMS) operates a consumer-focused telehealth platform that connects patients with healthcare providers for prescriptions and wellness products.
Why Should HIMS Be on Your Watchlist?
- Business is winning new contracts that can potentially increase in value as its customer base averaged 43.3% growth over the past two years
- Free cash flow margin jumped by 14.5 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
- Historical investments are beginning to pay off as its returns on capital are growing
Hims & Hers Health is trading at $51.80 per share, or 42.3x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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