While strong cash flow is a key indicator of stability, it doesn’t always translate to superior returns. Some cash-heavy businesses struggle with inefficient spending, slowing demand, or weak competitive positioning.
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 face some trouble.
One healthcare stock to sell:
Labcorp (LH)
Trailing 12-month free cash flow margin: 8.8%
With over 600 million tests performed annually and involvement in 90% of FDA-approved drugs in 2023, Labcorp (NYSE:LH) provides laboratory testing services and drug development solutions to doctors, hospitals, pharmaceutical companies, and patients worldwide.
Why Does LH Give Us Pause?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 2.5% annually over the last five years
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Sales were less profitable over the last five years as its earnings per share fell by 10.9% annually, worse than its revenue declines
At $355.95 per share, Labcorp trades at 18.8x forward P/E. Read our free research report to see why you should think twice about including LH in your portfolio.
Two healthcare stocks to watch:
BrightSpring Health Services (BTSG)
Trailing 12-month free cash flow margin: 3.2%
Founded in 1974, BrightSpring Health Services (NASDAQ:BTSG) offers home health care, hospice, neuro-rehabilitation, and pharmacy services.
Why Could BTSG Be a Winner?
- Impressive 25.4% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Market share will likely rise over the next 12 months as its expected revenue growth of 17.3% is robust
- Historical investments are beginning to pay off as its returns on capital are growing
BrightSpring Health Services’s stock price of $66.44 implies a valuation ratio of 29.4x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Medpace (MEDP)
Trailing 12-month free cash flow margin: 23.5%
Founded in 1992 as a scientifically-driven alternative to traditional contract research organizations, Medpace (NASDAQ:MEDP) provides outsourced clinical trial management and research services to help pharmaceutical, biotechnology, and medical device companies develop new treatments.
Why Do We Watch MEDP?
- Core business is healthy and doesn’t need acquisitions to boost sales as its organic revenue growth averaged 18.7% over the past two years
- Share repurchases over the last five years enabled its annual earnings per share growth of 30% to outpace its revenue gains
- MEDP is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its recently improved profitability means it has even more resources to invest or distribute
Medpace is trading at $648.03 per share, or 33.6x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Stocks we like even more
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating 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.