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.
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 leverage their financial strength to beat the competition and one that may struggle to keep up.
One Stock to Sell:
3M (MMM)
Trailing 12-Month Free Cash Flow Margin: 18.1%
Producers of the first asthma inhaler, 3M Company (NYSE: MMM) is a global conglomerate known for products in industries like healthcare, safety, electronics, and consumer goods.
Why Do We Steer Clear of MMM?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 4.8%
- Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
At $178.55 per share, 3M trades at 19.4x forward P/E. If you’re considering MMM for your portfolio, see our FREE research report to learn more.
Two Stocks to Buy:
Planet Labs (PL)
Trailing 12-Month Free Cash Flow Margin: 13.9%
Pioneering the concept of "agile aerospace" with hundreds of small but powerful satellites, Planet Labs (NYSE: PL) operates the world's largest fleet of Earth observation satellites, capturing daily images of our planet to provide insights on deforestation, agriculture, and climate change.
Why Is PL a Top Pick?
- Sales pipeline is in good shape as its backlog averaged 143% growth over the past two years
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 48.9% outpaced its revenue gains
- Free cash flow flipped to positive over the last five years, showing the company has crossed a key inflection point
Planet Labs is trading at $21.30 per share, or 344.1x forward EV-to-EBITDA. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Sezzle (SEZL)
Trailing 12-Month Free Cash Flow Margin: 51.6%
Founded in 2016 as an alternative to traditional credit cards for younger shoppers, Sezzle (NASDAQ: SEZL) provides a payment platform that allows consumers to split purchases into four interest-free installments over six weeks at participating retailers.
Why Will SEZL Beat the Market?
- Annual revenue growth of 66.1% over the past two years was outstanding, reflecting market share gains this cycle
- Earnings growth has trumped its peers over the last two years as its EPS has compounded at 22.7% annually
- Stellar return on equity showcases management’s ability to surface highly profitable business ventures
Sezzle’s stock price of $125.60 implies a valuation ratio of 20.6x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
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.
