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.
Not all companies are created equal, and StockStory is here to surface the ones with real upside. Keeping that in mind, here are two cash-producing companies that reinvest wisely to drive long-term success and one that may face some trouble.
One Stock to Sell:
Corning (GLW)
Trailing 12-Month Free Cash Flow Margin: 9.5%
Supplying windows for some of the United States’s earliest spacecraft, Corning (NYSE: GLW) provides glass and other electronic components for the consumer electronics, telecommunications, automotive, and healthcare industries.
Why Are We Wary of GLW?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 5.5% over the last two years was below our standards for the industrials sector
- 4.4 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
- Low returns on capital reflect management’s struggle to allocate funds effectively, and its decreasing returns suggest its historical profit centers are aging
At $62.66 per share, Corning trades at 25.3x forward P/E. Dive into our free research report to see why there are better opportunities than GLW.
Two Stocks to Watch:
McDonald's (MCD)
Trailing 12-Month Free Cash Flow Margin: 26.1%
With nicknames spanning Mickey D's in the U.S. to Makku in Japan, McDonald’s (NYSE: MCD) is a fast-food behemoth known for its convenience and broken ice cream machines.
Why Does MCD Stand Out?
- Same-store sales growth averaged 2.8% over the past two years, showing it’s bringing new and repeat diners into its restaurants
- Attractive franchise model leads to wonderful unit economics and a best-in-class gross margin of 56.9%
- Strong free cash flow margin of 27% enables it to reinvest or return capital consistently
McDonald's is trading at $300.01 per share, or 24x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Badger Meter (BMI)
Trailing 12-Month Free Cash Flow Margin: 18.3%
The developer of the world’s first frost-proof water meter in 1905, Badger Meter (NYSE: BMI) provides water control and measure equipment to various industries.
Why Should You Buy BMI?
- Market share has increased this cycle as its 17.8% annual revenue growth over the last two years was exceptional
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 32.1% annually, topping its revenue gains
- Robust free cash flow margin of 15.2% gives it many options for capital deployment, and its improved cash conversion implies it’s becoming a less capital-intensive business
Badger Meter’s stock price of $188.76 implies a valuation ratio of 36.2x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
Trump’s April 2024 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-small-cap company Comfort Systems (+782% 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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