While strong cash flow is a key indicator of stability, it doesn’t always translate to superior returns. Some cash-heavy businesses struggle with inefficient spending, slowing demand, or weak competitive positioning.
Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. Keeping that in mind, here are two cash-producing companies that reinvest wisely to drive long-term success and one best left off your watchlist.
One Stock to Sell:
Simply Good Foods (SMPL)
Trailing 12-Month Free Cash Flow Margin: 8.6%
Best known for its Atkins brand that was inspired by the popular diet of the same name, Simply Good Foods (NASDAQ:SMPL) is a packaged food company whose offerings help customers achieve their healthy eating or weight loss goals.
Why Do We Pass on SMPL?
- Annual revenue growth of 5.2% over the last three years was below our standards for the consumer staples sector
- Estimated sales decline of 9.9% for the next 12 months implies a challenging demand environment
- Day-to-day expenses have swelled relative to revenue over the last year as its operating margin fell by 31.9 percentage points
At $11.12 per share, Simply Good Foods trades at 6.5x forward P/E. Read our free research report to see why you should think twice about including SMPL in your portfolio.
Two Stocks to Watch:
United Therapeutics (UTHR)
Trailing 12-Month Free Cash Flow Margin: 34.6%
Founded by a mother seeking treatment for her daughter's pulmonary arterial hypertension, United Therapeutics (NASDAQ:UTHR) develops and commercializes medications for chronic lung diseases and other life-threatening conditions, with a focus on pulmonary hypertension treatments.
Why Are We Positive on UTHR?
- 14.7% annual revenue growth over the last five years surpassed the sector average as its offerings resonated with customers
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
- Industry-leading 29.1% return on capital demonstrates management’s skill in finding high-return investments, and its rising returns show it’s making even more lucrative bets
United Therapeutics’s stock price of $541.55 implies a valuation ratio of 18.3x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Core Natural Resources (CNR)
Trailing 12-Month Free Cash Flow Margin: 6.1%
Tracing its origins to 1864 and operating some mines southwest of Pittsburgh, Core Natural Resources (NYSE:CNR) mines and exports metallurgical coal used in steelmaking and thermal coal for power generation.
Why Does CNR Stand Out?
- Market share has increased this cycle as its 15.6% annual revenue growth over the last ten years was exceptional
- $4.27 billion in revenue gives it scale, which leads to bargaining power with suppliers and retailers
- CNR is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
Core Natural Resources is trading at $89.05 per share, or 20.7x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.