A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
Luckily for you, we built StockStory to help you separate the good from the bad. 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:
Waste Connections (WCN)
Trailing 12-Month Free Cash Flow Margin: 12.1%
Operating a network of municipal solid waste landfills in the U.S. and Canada, Waste Connections (NYSE:WCN) is North America's third-largest waste management company providing collection, disposal, and recycling services.
Why Does WCN Give Us Pause?
- Estimated sales growth of 5.8% for the next 12 months implies demand will slow from its two-year trend
- Free cash flow margin shrank by 2.5 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Below-average returns on capital indicate management struggled to find compelling investment opportunities, and its falling returns suggest its earlier profit pools are drying up
At $165.63 per share, Waste Connections trades at 28.8x forward P/E. Check out our free in-depth research report to learn more about why WCN doesn’t pass our bar.
Two Stocks to Watch:
Colgate-Palmolive (CL)
Trailing 12-Month Free Cash Flow Margin: 18.3%
Formed after the 1928 combination between toothpaste maker Colgate and soap maker Palmolive-Peet, Colgate-Palmolive (NYSE:CL) is a consumer products company that focuses on personal, household, and pet products.
Why Is CL Interesting?
- Enormous revenue base of $21.05 billion provides significant negotiating leverage in retail partnerships
- Differentiated product offerings are difficult to replicate at scale and lead to a best-in-class gross margin of 60.5%
- CL is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its improved cash conversion implies it’s becoming a less capital-intensive business
Colgate-Palmolive is trading at $92.90 per share, or 22.9x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Moog (MOG.A)
Trailing 12-Month Free Cash Flow Margin: 7.4%
Responsible for the flight control actuation system integrated in the B-2 stealth bomber, Moog (NYSE:MOG.A) provides precision motion control solutions used in aerospace and defense applications
Why Is MOG.A on Our Radar?
- Offerings and unique value proposition resonate with customers, as seen in its above-market 9.2% annual sales growth over the last two years
- Operating margin improvement of 3 percentage points over the last five years demonstrates its ability to scale efficiently
- Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 19.1% annually
Moog’s stock price of $409.76 implies a valuation ratio of 35.9x 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.