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.
Luckily for you, we built StockStory to help you separate the good from the bad. 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:
Disney (DIS)
Trailing 12-Month Free Cash Flow Margin: 7.4%
Founded by brothers Walt and Roy, Disney (NYSE: DIS) is a multinational entertainment conglomerate, renowned for its theme parks, movies, television networks, and merchandise.
Why Do We Avoid DIS?
- Annual sales growth of 9.5% over the last five years lagged behind its consumer discretionary peers as its large revenue base made it difficult to generate incremental demand
- Operating margin of 14.8% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
Disney’s stock price of $106.38 implies a valuation ratio of 15.3x forward P/E. Check out our free in-depth research report to learn more about why DIS doesn’t pass our bar.
Two Stocks to Watch:
HCA Healthcare (HCA)
Trailing 12-Month Free Cash Flow Margin: 10.2%
With roots dating back to 1968 and a network spanning 20 states, HCA Healthcare (NYSE: HCA) operates a network of 190 hospitals and 150+ outpatient facilities providing a full range of medical services across the US and England.
Why Is HCA a Top Pick?
- Unparalleled scale of $75.6 billion in revenue gives it negotiating leverage and staying power in an industry with high barriers to entry
- Share repurchases over the last five years enabled its annual earnings per share growth of 21% to outpace its revenue gains
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
At $478.88 per share, HCA Healthcare trades at 16.2x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
ExxonMobil (XOM)
Trailing 12-Month Free Cash Flow Margin: 7.1%
One of the successor companies to John D. Rockefeller's Standard Oil monopoly that was broken up in 1911, ExxonMobil (NYSE: XOM) explores for and produces crude oil and natural gas, refines and sells petroleum products, and manufactures petrochemicals.
Why Do We Like XOM?
- Dominant market position is represented by its $332.2 billion in revenue and gives it fixed cost leverage when sales grow
- EBITDA profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
- Free cash flow generation is better than most peers and allows it to explore new investment opportunities
ExxonMobil is trading at $147.77 per share, or 14.3x forward P/E. Is now the right time to buy? See for yourself 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 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%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. 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 (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
