A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
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 leverage their financial strength to beat the competition and one best left off your watchlist.
One Stock to Sell:
Columbia Sportswear (COLM)
Trailing 12-Month Free Cash Flow Margin: 8.6%
Originally founded as a hat store in 1938, Columbia Sportswear (NASDAQ: COLM) is a manufacturer of outerwear, sportswear, and footwear designed for outdoor enthusiasts.
Why Do We Think COLM Will Underperform?
- Constant currency revenue growth has disappointed over the past two years and shows demand was soft
- Projected sales for the next 12 months are flat and suggest demand will be subdued
- Waning returns on capital imply its previous profit engines are losing steam
Columbia Sportswear’s stock price of $59.69 implies a valuation ratio of 16.8x forward P/E. If you’re considering COLM for your portfolio, see our FREE research report to learn more.
Two Stocks to Watch:
Bill.com (BILL)
Trailing 12-Month Free Cash Flow Margin: 22.3%
Started by René Lacerte in 2006 after selling his previous payroll and accounting software company PayCycle to Intuit, Bill.com (NYSE: BILL) is a software as a service platform that aims to make payments and billing processes easier for small and medium-sized businesses.
Why Do We Like BILL?
- Billings growth has averaged 15.3% over the last year, indicating a healthy pipeline of new contracts that should drive future revenue increases
- Prominent and differentiated software leads to a stellar gross margin of 84.5%
- Well-designed software integrates seamlessly with other workflows, enabling swift payback periods on marketing expenses and customer growth at scale
At $45.98 per share, Bill.com trades at 3x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.
Paycom (PAYC)
Trailing 12-Month Free Cash Flow Margin: 20.1%
Founded in 1998 as one of the first online payroll companies, Paycom (NYSE: PAYC) provides software for small and medium-sized businesses (SMBs) to manage their payroll and HR needs in one place.
Why Are We Fans of PAYC?
- Software is difficult to replicate at scale and leads to a best-in-class gross margin of 85.9%
- User-friendly software enables clients to ramp up spending quickly, leading to the speedy recovery of customer acquisition costs
- Healthy operating margin of 27.9% shows it’s a well-run company with efficient processes
Paycom is trading at $229.71 per share, or 6.2x forward price-to-sales. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
When Trump unveiled his aggressive tariff plan in April 2024, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at 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).
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