While strong cash flow is a key indicator of stability, it doesn’t always translate to superior returns. Some cash-heavy businesses struggle with inefficient spending, slowing demand, or weak competitive positioning.
Not all companies are created equal, and StockStory is here to surface the ones with real upside. That said, here are two cash-producing companies that excel at turning cash into shareholder value and one that may struggle to keep up.
One Stock to Sell:
Strategic Education (STRA)
Trailing 12-Month Free Cash Flow Margin: 10%
Formed through the merger of Strayer Education and Capella Education in 2018, Strategic Education (NASDAQ: STRA) is a career-focused higher education provider.
Why Is STRA Risky?
- Performance surrounding its domestic students has lagged its peers
- Earnings per share fell by 7.1% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Underwhelming 3.7% return on capital reflects management’s difficulties in finding profitable growth opportunities
Strategic Education’s stock price of $83.16 implies a valuation ratio of 14.2x forward P/E. Read our free research report to see why you should think twice about including STRA in your portfolio.
Two Stocks to Buy:
Chart (GTLS)
Trailing 12-Month Free Cash Flow Margin: 11.2%
Installing the first bulk Co2 tank for McDonalds’s sodas, Chart (NYSE: GTLS) provides equipment to store and transport gasses.
Why Are We Backing GTLS?
- Sales pipeline is in good shape as its backlog averaged 31.9% growth over the past two years
- Earnings per share have massively outperformed its peers over the last two years, increasing by 28% annually
- Free cash flow margin jumped by 9.6 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Chart is trading at $199.91 per share, or 15.3x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
Paymentus (PAY)
Trailing 12-Month Free Cash Flow Margin: 7.7%
Founded in 2004 to simplify the complex world of bill payments, Paymentus (NYSE: PAY) provides a cloud-based platform that helps utilities, municipalities, and service providers automate billing and payment processes.
Why Do We Love PAY?
- Impressive 36.9% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 134% annually, topping its revenue gains
At $30.21 per share, Paymentus trades at 44.3x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 6 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 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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