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. That said, here is one cash-producing company that reinvests wisely to drive long-term success and two that may struggle to keep up.
Two Stocks to Sell:
United Airlines (UAL)
Trailing 12-Month Free Cash Flow Margin: 4%
Founded in 1926, United Airlines Holdings (NASDAQ: UAL) operates a global airline network, providing passenger and cargo air transportation services across domestic and international routes.
Why Do We Pass on UAL?
- Performance surrounding its revenue passenger miles has lagged its peers
- Free cash flow margin is forecasted to shrink by 3.8 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
- Improving returns on capital suggest management is identifying more profitable investments
United Airlines’s stock price of $108.98 implies a valuation ratio of 8.9x forward P/E. If you’re considering UAL for your portfolio, see our FREE research report to learn more.
Collegium Pharmaceutical (COLL)
Trailing 12-Month Free Cash Flow Margin: 40.6%
Pioneering abuse-deterrent technology in a field plagued by addiction concerns, Collegium Pharmaceutical (NASDAQ: COLL) develops and markets specialty medications for treating moderate to severe pain, including abuse-deterrent opioid formulations.
Why Are We Hesitant About COLL?
- Subscale operations are evident in its revenue base of $808.2 million, meaning it has fewer distribution channels than its larger rivals
- Estimated sales growth of 3.4% for the next 12 months implies demand will slow from its two-year trend
- Expenses have increased as a percentage of revenue over the last two years as its adjusted operating margin fell by 7.6 percentage points
Collegium Pharmaceutical is trading at $22.80 per share, or 3.2x forward P/E. To fully understand why you should be careful with COLL, check out our full research report (it’s free).
One Stock to Buy:
GE Aerospace (GE)
Trailing 12-Month Free Cash Flow Margin: 18.6%
One of the original 12 companies on the Dow Jones Industrial Average, General Electric (NYSE: GE) is a multinational conglomerate providing technologies for various sectors including aviation, power, renewable energy, and healthcare.
Why Will GE Outperform?
- Annual revenue growth of 19.3% over the past two years was outstanding, reflecting market share gains this cycle
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 35.5% exceeded its revenue gains over the last two years
- GE is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
At $314.36 per share, GE Aerospace trades at 37.2x forward P/E. Is now the right time to buy? See for yourself in our full 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.
