A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
Luckily for you, we built StockStory to help you separate the good from the bad. That said, here is one cash-producing company that reinvests wisely to drive long-term success and two that may face some trouble.
Two Stocks to Sell:
Hillenbrand (HI)
Trailing 12-Month Free Cash Flow Margin: 5%
Hillenbrand, Inc. (NYSE: HI) is an industrial company that designs, manufactures, and sells highly engineered processing equipment and solutions for various industries.
Why Do We Avoid HI?
- Annual revenue growth of 7.2% over the last five years was below our standards for the industrials sector
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 5.9% annually
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 14.7 percentage points
Hillenbrand’s stock price of $21.48 implies a valuation ratio of 8.4x forward P/E. To fully understand why you should be careful with HI, check out our full research report (it’s free).
United Airlines (UAL)
Trailing 12-Month Free Cash Flow Margin: 8.4%
Founded in 1926, United Airlines Holdings (NASDAQ: UAL) operates a global airline network, providing passenger and cargo air transportation services across domestic and international routes.
Why Do We Steer Clear of UAL?
- Number of revenue passenger miles has disappointed over the past two years, indicating weak demand for its offerings
- Projected 6.8 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
At $77.03 per share, United Airlines trades at 7.3x forward P/E. If you’re considering UAL for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Insulet (PODD)
Trailing 12-Month Free Cash Flow Margin: 13.3%
Revolutionizing diabetes care with its tubeless "Pod" technology, Insulet (NASDAQ: PODD) develops and manufactures innovative insulin delivery systems for people with diabetes, primarily through its Omnipod product line.
Why Is PODD a Good Business?
- Business is well-positioned no matter the global macroeconomic backdrop as its constant currency revenue growth averaged 26.6% over the past two years
- Additional sales over the last five years increased its profitability as the 113% annual growth in its earnings per share outpaced its revenue
- Free cash flow margin increased by 21.9 percentage points over the last five years, giving the company more capital to invest or return to shareholders
Insulet is trading at $303.62 per share, or 68.7x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking 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 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.
