A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
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 excel at turning cash into shareholder value and one that may struggle to keep up.
One Stock to Sell:
Albany (AIN)
Trailing 12-Month Free Cash Flow Margin: 11.8%
Founded in 1895, Albany (NYSE: AIN) is a global textiles and materials processing company, specializing in machine clothing for paper mills and engineered composite structures for aerospace and other industries.
Why Do We Pass on AIN?
- Sales trends were unexciting over the last five years as its 3% annual growth was below the typical industrials company
- Efficiency has decreased over the last five years as its operating margin fell by 9 percentage points
- Earnings per share fell by 5.6% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
Albany is trading at $63.44 per share, or 10.2x forward EV-to-EBITDA. To fully understand why you should be careful with AIN, check out our full research report (it’s free).
Two Stocks to Buy:
Restaurant Brands (QSR)
Trailing 12-Month Free Cash Flow Margin: 15.5%
Formed through a strategic merger, Restaurant Brands International (NYSE: QSR) is a multinational corporation that owns three iconic fast-food chains: Burger King, Tim Hortons, and Popeyes.
Why Is QSR a Good Business?
- Same-store sales growth averaged 5.3% over the past two years, showing it’s bringing new and repeat diners into its restaurants
- Excellent operating margin of 29% highlights the efficiency of its business model
- Strong free cash flow margin of 16.2% enables it to reinvest or return capital consistently
Restaurant Brands’s stock price of $66.70 implies a valuation ratio of 18x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Howmet (HWM)
Trailing 12-Month Free Cash Flow Margin: 13.5%
Inventing the first forged aluminum truck wheel, Howmet (NYSE: HWM) specializes in lightweight metals engineering and manufacturing multi-material components used in vehicles.
Why Do We Love HWM?
- Market share has increased this cycle as its 12.7% annual revenue growth over the last two years was exceptional
- Share repurchases over the last two years enabled its annual earnings per share growth of 40.3% to outpace its revenue gains
- Free cash flow margin jumped by 12.6 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
At $154.60 per share, Howmet trades at 45.5x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Axon (+711% five-year return). Find your next big winner with StockStory today for free.
