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 are two cash-producing companies that excel at turning cash into shareholder value and one that may face some trouble.
One Stock to Sell:
Comcast (CMCSA)
Trailing 12-Month Free Cash Flow Margin: 10.9%
Formerly known as American Cable Systems, Comcast (NASDAQ: CMCSA) is a multinational telecommunications company offering a wide range of services.
Why Do We Pass on CMCSA?
- Number of domestic broadband customers has disappointed over the past two years, indicating weak demand for its offerings
- Demand will likely fall over the next 12 months as Wall Street expects flat revenue
- Low returns on capital reflect management’s struggle to allocate funds effectively
At $34.25 per share, Comcast trades at 7.8x forward P/E. Check out our free in-depth research report to learn more about why CMCSA doesn’t pass our bar.
Two Stocks to Watch:
Apple (AAPL)
Trailing 12-Month Free Cash Flow Margin: 24.6%
Creator of the iPhone and App Store, Apple (NASDAQ: AAPL) is a legendary developer of consumer electronics and software.
Why Do We Watch AAPL?
- Apple's revenue base is so large because nearly everyone in the U.S. has an iPhone, but this is a double-edged sword. Growth must now come from upgrades, a harder pitch that has resulted in sluggish top-line performance recently.
- Still, Apple's devices have endured for decades, speaking to its brand, design ethos, and technological chops. Its success is rare in the world of consumer electronics, which is fraught because of commoditization, competition, and obsolescence risk.
- The company may not have the best gross margin because of its hardware orientation, but it still manages to produce elite operating and free cash flow margins. This shows it doesn’t need over-the-top marketing campaigns to convince people to buy its products.
Apple is trading at $197.44 per share, or 26.3x forward price-to-earnings. Is now a good time to buy? See for yourself in our full research report, it’s free.
Integral Ad Science (IAS)
Trailing 12-Month Free Cash Flow Margin: 21.9%
Founded in 2009, Integral Ad Science (NASDAQ: IAS) provides digital advertising verification and optimization solutions, ensuring that ads are viewable by real people in brand-safe environments across various platforms and devices.
Why Does IAS Stand Out?
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
- Excellent operating margin of 11.4% highlights the efficiency of its business model, and its profits increased over the last year as it scaled
- IAS is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
Integral Ad Science’s stock price of $8.05 implies a valuation ratio of 2.2x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.
