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. That said, here are two cash-producing companies that leverage their financial strength to beat the competition and one that may face some trouble.

One Stock to Sell:

Columbia Sportswear (COLM)

Trailing 12-Month Free Cash Flow Margin: 7.5%

Originally founded as a hat store in 1938, Columbia Sportswear (NASDAQ: COLM) is a manufacturer of outerwear, sportswear, and footwear designed for outdoor enthusiasts.

Why Should You Dump COLM?

1. Constant currency growth was below our standards over the past two years, suggesting it might need to invest in product improvements to get back on track
2. Demand will likely be weak over the next 12 months as Wall Street expects flat revenue
3. Diminishing returns on capital suggest its earlier profit pools are drying up

At $54.40 per share, Columbia Sportswear trades at 17x forward P/E. Dive into our free research report to see why there are better opportunities than COLM.

Two Stocks to Watch:

Ulta (ULTA)

Trailing 12-Month Free Cash Flow Margin: 8.2%

Offering high-end prestige brands as well as lower-priced, mass-market ones, Ulta Beauty (NASDAQ: ULTA) is an American retailer that sells makeup, skincare, haircare, and fragrance products.

Why Are We Positive On ULTA?

1. Aggressive strategy of rolling out new stores to gobble up whitespace is prudent given its same-store sales growth
2. ULTA is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
3. Industry-leading 32.1% return on capital demonstrates management’s skill in finding high-return investments

Ulta’s stock price of $536.95 implies a valuation ratio of 21.5x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.

ITT (ITT)

Trailing 12-Month Free Cash Flow Margin: 13.2%

Playing a crucial role in the development of the first transatlantic television transmission in 1956, ITT (NYSE: ITT) provides motion and fluid handling equipment for various industries

Why Do We Like ITT?

1. Healthy operating margin of 16.4% shows it’s a well-run company with efficient processes, and its operating leverage amplified its profits over the last five years
2. Free cash flow margin expanded by 15.5 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
3. ROIC punches in at 18.6%, illustrating management’s expertise in identifying profitable investments

ITT is trading at $182.88 per share, or 27x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.

High-Quality Stocks for All Market Conditions

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our Top 9 Market-Beating Stocks. 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 Kadant (+351% 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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