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. That said, here are two cash-producing companies that excel at turning cash into shareholder value and one best left off your watchlist.
One Stock to Sell:
Twilio (TWLO)
Trailing 12-Month Free Cash Flow Margin: 17.7%
Known for the clever "Twilio Magic" demo that had developers creating functioning communications apps in minutes, Twilio (NYSE:TWLO) provides a platform that enables businesses to communicate with their customers through voice, messaging, email, and other digital channels.
Why Does TWLO Give Us Pause?
- Annual revenue growth of 14.7% over the last two years was below our standards for the software sector
- Gross margin of 48.6% is way below its competitors, leaving less money to invest in areas like marketing and R&D
- Operating margin improvement of 3.7 percentage points over the last year demonstrates its ability to scale efficiently
At $239.44 per share, Twilio trades at 6.1x forward price-to-sales. Read our free research report to see why you should think twice about including TWLO in your portfolio.
Two Stocks to Watch:
First Solar (FSLR)
Trailing 12-Month Free Cash Flow Margin: 27.9%
Headquartered in Arizona, First Solar (NASDAQ:FSLR) specializes in manufacturing solar panels and providing photovoltaic solar energy solutions.
Why Should You Buy FSLR?
- Market share has increased this cycle as its 19.5% annual revenue growth over the last two years was exceptional
- Free cash flow profile has moved into positive territory over the last five years, showing the company is at an important crossroads
- Returns on capital are climbing as management makes more lucrative bets
First Solar’s stock price of $192.70 implies a valuation ratio of 9.6x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Waters Corporation (WAT)
Trailing 12-Month Free Cash Flow Margin: 8.5%
Founded in 1958 and pioneering innovations in laboratory analysis for over six decades, Waters (NYSE:WAT) develops and manufactures analytical instruments, software, and consumables for liquid chromatography, mass spectrometry, and thermal analysis used in scientific research and quality testing.
Why Are We Fans of WAT?
- Exciting sales outlook for the upcoming 12 months calls for 48.6% growth, an acceleration from its two-year trend
- Has the option to reinvest or return capital to investors as its 14.9% free cash flow margin is well above its peers
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
Waters Corporation is trading at $416.80 per share, or 26.7x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
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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 Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.