Generating cash is essential for any business, but not all cash-rich companies are great investments. Some produce plenty of cash but fail to allocate it effectively, leading to missed opportunities.
Luckily for you, we built StockStory to help you separate the good from the bad. That said, here is one cash-producing company that excels at turning cash into shareholder value and two that may struggle to keep up.
Two Stocks to Sell:
BD (BDX)
Trailing 12-Month Free Cash Flow Margin: 12.5%
With a history dating back to 1897 and a presence in virtually every hospital around the globe, Becton Dickinson (NYSE: BDX) develops and manufactures medical supplies, devices, laboratory equipment and diagnostic products used by healthcare institutions and professionals worldwide.
Why Are We Cautious About BDX?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 4.1% over the last five years was below our standards for the healthcare sector
- 10.5 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
BD’s stock price of $171.80 implies a valuation ratio of 11.4x forward P/E. Dive into our free research report to see why there are better opportunities than BDX.
NV5 Global (NVEE)
Trailing 12-Month Free Cash Flow Margin: 5.4%
Operating from over 100 locations across the U.S. and internationally, NV5 Global (NASDAQ: NVEE) provides engineering, environmental, geospatial, and technical consulting services to public and private sector clients for infrastructure and building projects.
Why Are We Wary of NVEE?
- Day-to-day expenses have swelled relative to revenue over the last five years as its adjusted operating margin fell by 5.1 percentage points
- Incremental sales over the last two years were much less profitable as its earnings per share fell by 2.8% annually while its revenue grew
- 13.7 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
NV5 Global is trading at $22.79 per share, or 17.2x forward P/E. If you’re considering NVEE for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Inter Parfums (IPAR)
Trailing 12-Month Free Cash Flow Margin: 15.5%
With licenses to produce colognes and perfumes under brands such as Kate Spade, Van Cleef & Arpels, and Abercrombie & Fitch, Inter Parfums (NASDAQ: IPAR) manufactures and distributes fragrances worldwide.
Why Do We Love IPAR?
- Impressive 16.3% annual revenue growth over the last three years indicates it’s winning market share
- Differentiated product offerings are difficult to replicate at scale and result in a premier gross margin of 55.6%
- Free cash flow margin jumped by 11.3 percentage points over the last year, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
At $131.91 per share, Inter Parfums trades at 23.8x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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 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
