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.
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 that may face some trouble.
One Stock to Sell:
Flutter Entertainment (FLUT)
Trailing 12-Month Free Cash Flow Margin: 3.7%
With its digital fingerprints on nearly every aspect of global gambling, from the Super Bowl bettor to the online poker aficionado, Flutter Entertainment (NASDAQ: FLUT) operates a portfolio of leading online sports betting and gaming brands including FanDuel, PokerStars, Paddy Power, and Sky Betting & Gaming.
Why Do We Steer Clear of FLUT?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 17.8% over the last two years was below our standards for the consumer discretionary sector
- Subpar operating margin of 2.7% constrains its ability to invest in process improvements or effectively respond to new competitive threats
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
Flutter Entertainment’s stock price of $106.06 implies a valuation ratio of 16.2x forward P/E. Read our free research report to see why you should think twice about including FLUT in your portfolio.
Two Stocks to Watch:
Lululemon (LULU)
Trailing 12-Month Free Cash Flow Margin: 11.4%
Originally serving yogis and hockey players, Lululemon (NASDAQ: LULU) is a designer, distributor, and retailer of athletic apparel for men and women.
Why Is LULU a Top Pick?
- Aggressive expansion of new stores reflects an offensive push to quickly grow and sell in markets where it has few or no locations
- Unique assortment of products and pricing power lead to a best-in-class gross margin of 57.5%
- Disciplined cost controls and effective management resulted in a strong two-year operating margin of 20.8%
Lululemon is trading at $118.03 per share, or 10.4x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Chevron (CVX)
Trailing 12-Month Free Cash Flow Margin: 7.3%
Operating everything from deepwater drilling rigs to corner gas stations, Chevron (NYSE: CVX) explores for, produces, and transports crude oil and natural gas, then refines that crude oil into gasoline, diesel, and other petroleum products.
Why Are We Positive on CVX?
- Offerings and unique value proposition resonate with customers, as seen in its above-market 4.1% annual sales growth over the last ten years
- Dominant market position is represented by its $190 billion in revenue and gives it fixed cost leverage when sales grow
- Has the option to reinvest or return capital to investors as its 10.4% free cash flow margin is well above its peers
At $168.95 per share, Chevron trades at 10x forward P/E. Is now a good time to buy? Find out in our full 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 (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
