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.
Not all companies are created equal, and StockStory is here to surface the ones with real upside. Keeping that in mind, here is one cash-producing company that leverages its financial strength to beat its competitors and two best left off your watchlist.
Two Stocks to Sell:
Amkor (AMKR)
Trailing 12-Month Free Cash Flow Margin: 3.6%
Operating through a largely Asian facility footprint, Amkor Technologies (NASDAQ: AMKR) provides outsourced packaging and testing for semiconductors.
Why Is AMKR Risky?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 5.1% annually over the last two years
- High input costs result in an inferior gross margin of 14.5% that must be offset through higher volumes
- Already-low operating margin of 6.9% fell over the last five years, and the smaller profit dollars make it harder to react to unexpected market developments
Amkor’s stock price of $18.80 implies a valuation ratio of 11.2x forward P/E. Dive into our free research report to see why there are better opportunities than AMKR.
Home Depot (HD)
Trailing 12-Month Free Cash Flow Margin: 9.3%
Founded and headquartered in Atlanta, Georgia, Home Depot (NYSE: HD) is a home improvement retailer that sells everything from tools to building materials to appliances.
Why Do We Think Twice About HD?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
- Estimated sales growth of 1.6% for the next 12 months implies demand will slow from its six-year trend
- Free cash flow margin dropped by 2.5 percentage points over the last year, implying the company became more capital intensive as competition picked up
At $374.15 per share, Home Depot trades at 24.3x forward P/E. Check out our free in-depth research report to learn more about why HD doesn’t pass our bar.
One Stock to Watch:
Impinj (PI)
Trailing 12-Month Free Cash Flow Margin: 12.2%
Founded by Caltech professor Carver Mead and one of his students Chris Diorio, Impinj (NASDAQ: PI) is a maker of radio-frequency identification (RFID) hardware and software.
Why Is PI Interesting?
- Impressive 11.9% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Incremental sales over the last five years have been highly profitable as its earnings per share increased by 49.5% annually, topping its revenue gains
- Free cash flow margin expanded by 23.7 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
Impinj is trading at $117.75 per share, or 73.5x 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
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free.
