Generating cash is essential for any business, but not all cash-rich companies are great investments. Some produce plenty of cash but fail to allocate it effectively, leading to missed opportunities.
Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. That said, here are two cash-producing companies that reinvest wisely to drive long-term success and one that may struggle to keep up.
One Stock to Sell:
SunOpta (STKL)
Trailing 12-Month Free Cash Flow Margin: 4.8%
Committed to clean-label foods, SunOpta (NASDAQ: STKL) is a sustainability-focused food and beverage company specializing in the sourcing, processing, and packaging of organic products.
Why Should You Dump STKL?
- Annual sales declines of 1.6% for the past three years show its products struggled to connect with the market
- Subscale operations are evident in its revenue base of $792.4 million, meaning it has fewer distribution channels than its larger rivals
- Easily substituted products (and therefore stiff competition) result in an inferior gross margin of 15.4% that must be offset through higher volumes
SunOpta is trading at $3.80 per share, or 26.5x forward P/E. Check out our free in-depth research report to learn more about why STKL doesn’t pass our bar.
Two Stocks to Watch:
Comfort Systems (FIX)
Trailing 12-Month Free Cash Flow Margin: 9.7%
Formed through the merger of 12 companies, Comfort Systems (NYSE: FIX) provides mechanical and electrical contracting services.
Why Are We Bullish on FIX?
- Average backlog growth of 33.6% over the past two years shows it has a steady sales pipeline that will drive future orders
- Share repurchases over the last two years enabled its annual earnings per share growth of 74.2% to outpace its revenue gains
- Returns on capital are growing as management capitalizes on its market opportunities
At $961.90 per share, Comfort Systems trades at 34.7x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
Leidos (LDOS)
Trailing 12-Month Free Cash Flow Margin: 8%
Formed through the split of IT services company SAIC, Leidos (NYSE: LDOS) offers technology and engineering solutions such as military training systems for the defense, civil, and health markets.
Why Are We Positive On LDOS?
- Backlog has averaged 15.2% growth over the past two years, showing it has a pipeline of unfulfilled orders that will support revenue in the future
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 27.6% exceeded its revenue gains over the last two years
- Free cash flow margin jumped by 3.3 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Leidos’s stock price of $189.97 implies a valuation ratio of 16.2x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in 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 244% over the last five years (as of June 30, 2025).
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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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