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 leverage their financial strength to beat the competition and one best left off your watchlist.

One Stock to Sell:

Peloton (PTON)

Trailing 12-Month Free Cash Flow Margin: 15.5%

Started as a Kickstarter campaign, Peloton (NASDAQ: PTON) is a fitness technology company known for its at-home exercise equipment and interactive online workout classes.

Why Is PTON Risky?

1. Number of connected fitness subscribers has disappointed over the past two years, indicating weak demand for its offerings
2. Poor expense management has led to operating margin losses
3. Sales over the last five years were less profitable as its earnings per share fell by 16.5% annually while its revenue was flat

Peloton is trading at $7.48 per share, or 39.3x forward P/E. Read our free research report to see why you should think twice about including PTON in your portfolio.

Two Stocks to Watch:

MongoDB (MDB)

Trailing 12-Month Free Cash Flow Margin: 10.5%

Named after "humongous database," reflecting its ability to handle massive data loads, MongoDB (NASDAQ: MDB) provides a flexible document-based database platform that helps developers build, deploy, and maintain modern applications more efficiently.

Why Do We Like MDB?

1. Impressive 34.6% annual revenue growth over the last five years indicates it’s winning market share
2. Ability to secure long-term commitments with customers is evident in its 25.2% ARR growth over the last year

At $371.74 per share, MongoDB trades at 11.8x forward price-to-sales. Is now the right time to buy? See for yourself in our full research report, it’s free for active Edge members.

Cardinal Health (CAH)

Trailing 12-Month Free Cash Flow Margin: 1.9%

Operating as a critical link in the healthcare supply chain since 1979, Cardinal Health (NYSE: CAH) distributes pharmaceuticals and manufactures medical products for hospitals, pharmacies, and healthcare providers across the global healthcare supply chain.

Why Does CAH Stand Out?

1. Enormous revenue base of $234.3 billion gives it economies of scale and advantages over new entrants due to the industry’s regulatory complexity
2. Projected revenue growth of 12% for the next 12 months indicates demand will rise above its two-year trend
3. Earnings per share grew by 9.4% annually over the last five years and easily exceeded the peer group average

Cardinal Health’s stock price of $205.60 implies a valuation ratio of 20.5x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.

High-Quality Stocks for All Market Conditions

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