Businesses with strong free cash flow tend to be more adaptable and resilient. Some of these companies shine bright by using their cash wisely to strengthen their market positions.
Even among businesses with healthy cash flow, only a select few maximize its potential, and we’re here to pinpoint them. That said, here are three cash-producing companies that reinvest wisely to drive long-term success.
AbbVie (ABBV)
Trailing 12-Month Free Cash Flow Margin: 28.3%
Born from a 2013 spinoff of Abbott Laboratories' pharmaceutical business, AbbVie (NYSE: ABBV) is a biopharmaceutical company that develops and markets medications for autoimmune diseases, cancer, neurological disorders, and other complex health conditions.
Why Could ABBV Be a Winner?
- Enormous revenue base of $64.39 billion gives it economies of scale and advantages over new entrants due to the industry’s regulatory complexity
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
- ROIC punches in at 18.6%, illustrating management’s expertise in identifying profitable investments
AbbVie’s stock price of $246.38 implies a valuation ratio of 16x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Corpay (CPAY)
Trailing 12-Month Free Cash Flow Margin: 32.6%
Formerly known as FLEETCOR until its 2024 rebrand, Corpay (NYSE: CPAY) provides specialized payment solutions for businesses to manage vehicle expenses, corporate payments, and lodging costs with enhanced control and reporting capabilities.
Why Do We Love CPAY?
- Annual revenue growth of 15.2% over the past five years was outstanding, reflecting market share gains this cycle
- Share repurchases over the last two years enabled its annual earnings per share growth of 18.1% to outpace its revenue gains
- Market-beating return on equity illustrates that management has a knack for investing in profitable ventures
At $405.53 per share, Corpay trades at 13.8x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Crescent Energy (CRGY)
Trailing 12-Month Free Cash Flow Margin: 19.3%
Controlling over 1.4 million net acres across proven U.S. basins, Crescent Energy (NYSE: CRGY) extracts oil and natural gas from underground reservoirs in Texas and the Rocky Mountains.
Why Will CRGY Outperform?
- Annual revenue growth of 36.2% over the last five years was superb and indicates its market share increased during this cycle
- Superiority of its unit economics is reflected in its premier gross margin of 60.2%
- Strong free cash flow margin of 16.9% enables it to reinvest or return capital consistently
Crescent Energy is trading at $10.98 per share, or 5x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
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