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 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:
Okta (OKTA)
Trailing 12-Month Free Cash Flow Margin: 31.3%
Named after the meteorological measurement for cloud cover, Okta (NASDAQ:OKTA) provides cloud-based identity management solutions that help organizations securely connect their employees, partners, and customers to the right applications and services.
Why Are We Hesitant About OKTA?
- Customers were hesitant to make long-term commitments to its software as its 11.8% average ARR growth over the last year was sluggish
- Estimated sales growth of 9.9% for the next 12 months implies demand will slow from its two-year trend
- Operating margin improvement of 4.9 percentage points over the last year demonstrates its ability to scale efficiently
Okta is trading at $191.63 per share, or 9.7x forward price-to-sales. If you’re considering OKTA for your portfolio, see our FREE research report to learn more.
Two Stocks to Watch:
Brinker International (EAT)
Trailing 12-Month Free Cash Flow Margin: 9.6%
Founded by Norman Brinker in Dallas, Brinker International (NYSE:EAT) is a casual restaurant chain that operates the Chili’s, Maggiano’s Little Italy, and It’s Just Wings banners.
Why Could EAT Be a Winner?
- Average same-store sales growth of 14.6% over the past two years indicates its restaurants are resonating with diners
- Revenue base of $5.81 billion gives it economies of scale and some negotiating power with suppliers
- Free cash flow margin increased by 1.9 percentage points over the last year, giving the company more capital to invest or return to shareholders
Brinker International’s stock price of $200.20 implies a valuation ratio of 14.8x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
TransUnion (TRU)
Trailing 12-Month Free Cash Flow Margin: 16.1%
One of the three major credit bureaus in the United States alongside Equifax and Experian, TransUnion (NYSE:TRU) is a global information and insights company that provides credit reports, fraud prevention tools, and data analytics to help businesses make decisions and consumers manage their financial health.
Why Do We Like TRU?
- Impressive 11.7% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Sales outlook for the upcoming 12 months implies the business will stay on its desirable two-year growth trajectory
- Free cash flow margin expanded by 14.5 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
At $72.68 per share, TransUnion trades at 14x 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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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.