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.
Luckily for you, we built StockStory to help you separate the good from the bad. That said, here is one cash-producing company that reinvests wisely to drive long-term success and two best left off your watchlist.
Two stocks to sell:
Restaurant Brands (QSR)
Trailing 12-month free cash flow margin: 16.2%
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 Does QSR Fall Short?
- Demand is forecasted to shrink as its estimated sales for the next 12 months are flat
- Earnings per share lagged its peers over the last seven years as they only grew by 6% annually
Restaurant Brands is trading at $74.60 per share, or 16.8x forward P/E. If you’re considering QSR for your portfolio, see our FREE research report to learn more.
MarketAxess (MKTX)
Trailing 12-month free cash flow margin: 30.5%
Pioneering the shift from phone-based to electronic bond trading since 2000, MarketAxess (NASDAQ: MKTX) operates electronic trading platforms that enable institutional investors and broker-dealers to efficiently trade fixed-income securities like corporate and government bonds.
Why Are We Out on MKTX?
- 3.6% annual revenue growth over the last two years was slower than its financials peers
- Performance over the past five years shows its incremental sales were less profitable as its earnings per share were flat
MarketAxess’s stock price of $165.49 implies a valuation ratio of 19.3x forward P/E. Dive into our free research report to see why there are better opportunities than MKTX.
One stock to watch:
EnerSys (ENS)
Trailing 12-month free cash flow margin: 18.9%
Supplying batteries that power equipment as big as mining rigs, EnerSys (NYSE: ENS) manufactures various kinds of batteries for a range of industries.
Why Are We Positive on ENS?
- Operating margin expanded by 7.3 percentage points over the last five years as it scaled and became more efficient
- Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Free cash flow margin expanded by 23.8 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
At $159.94 per share, EnerSys trades at 12.2x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks we like even more
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
