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. Keeping that in mind, here is one cash-producing company that excels at turning cash into shareholder value and two that may face some trouble.
Two Stocks to Sell:
Hershey (HSY)
Trailing 12-Month Free Cash Flow Margin: 14.6%
Best known for its milk chocolate bar and Hershey's Kisses, Hershey (NYSE: HSY) is an iconic company known for its chocolate products.
Why Is HSY Not Exciting?
- Declining unit sales over the past two years indicate demand is soft and that the company may need to revise its product strategy
- Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 4.4 percentage points
- Flat earnings per share over the last three years underperformed the sector average
Hershey is trading at $187.79 per share, or 32.5x forward P/E. Check out our free in-depth research report to learn more about why HSY doesn’t pass our bar.
Vulcan Materials (VMC)
Trailing 12-Month Free Cash Flow Margin: 14.5%
Founded in 1909, Vulcan Materials (NYSE: VMC) is a producer of construction aggregates, primarily crushed stone, sand, and gravel.
Why Are We Wary of VMC?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last two years
- Sluggish trends in its tons shipped suggest customers aren’t adopting its solutions as quickly as the company hoped
- Gross margin of 25% reflects its high production costs
Vulcan Materials’s stock price of $294.84 implies a valuation ratio of 32.5x forward P/E. If you’re considering VMC for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
Qualcomm (QCOM)
Trailing 12-Month Free Cash Flow Margin: 27%
Having been at the forefront of developing the standards for cellular connectivity for over four decades, Qualcomm (NASDAQ: QCOM) is a leading innovator and a fabless manufacturer of wireless technology chips used in smartphones, autos and internet of things appliances.
Why Could QCOM Be a Winner?
- Market share has increased this cycle as its 16.7% annual revenue growth over the last five years was exceptional
- Robust free cash flow margin of 30.1% gives it many options for capital deployment
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
At $162.98 per share, Qualcomm trades at 13.8x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
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 5 Strong Momentum 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-small-cap company Exlservice (+354% 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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