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 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:
PACCAR (PCAR)
Trailing 12-Month Free Cash Flow Margin: 12.9%
Founded more than a century ago, PACCAR (NASDAQ: PCAR) designs and manufactures commercial trucks of various weights and sizes for the commercial trucking industry.
Why Is PCAR Not Exciting?
- Annual sales declines of 11.2% for the past two years show its products and services struggled to connect with the market during this cycle
- Earnings per share have dipped by 29% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Waning returns on capital imply its previous profit engines are losing steam
PACCAR’s stock price of $110.03 implies a valuation ratio of 16.6x forward P/E. Read our free research report to see why you should think twice about including PCAR in your portfolio.
Two Stocks to Watch:
ResMed (RMD)
Trailing 12-Month Free Cash Flow Margin: 29.2%
Founded in 1989 to address the then-underdiagnosed condition of sleep apnea, ResMed (NYSE: RMD) develops cloud-connected medical devices and software solutions that treat sleep apnea, COPD, and other respiratory disorders for home and clinical use.
Why Are We Fans of RMD?
- Average constant currency growth of 8.9% over the past two years demonstrates its ability to grow internationally despite currency fluctuations
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 15.9% exceeded its revenue gains over the last five years
- Free cash flow margin grew by 23.1 percentage points over the last five years, giving the company more chips to play with
At $221.50 per share, ResMed trades at 18.2x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Cencora (COR)
Trailing 12-Month Free Cash Flow Margin: 1.2%
Formerly known as AmerisourceBergen until its 2023 rebranding, Cencora (NYSE: COR) is a global pharmaceutical distribution company that connects manufacturers with healthcare providers while offering logistics, data analytics, and consulting services.
Why Is COR a Top Pick?
- Unparalleled scale of $332.8 billion in revenue enables it to spread administrative costs across a larger membership base
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
Cencora is trading at $309.50 per share, or 15.5x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
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-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
