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.
Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. Keeping that in mind, 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:
Thermon (THR)
Trailing 12-Month Free Cash Flow Margin: 9.8%
Creating the first packaged tracing systems, Thermon (NYSE: THR) is a leading provider of engineered industrial process heating solutions for process industries.
Why Are We Hesitant About THR?
- Annual revenue growth of 3.5% over the last two years was below our standards for the industrials sector
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 4%
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 5.6% annually
Thermon is trading at $37.13 per share, or 18.2x forward P/E. Read our free research report to see why you should think twice about including THR in your portfolio.
Two Stocks to Watch:
Match Group (MTCH)
Trailing 12-Month Free Cash Flow Margin: 27.7%
Originally started as a dial-up service before widespread internet adoption, Match (NASDAQ: MTCH) was an early innovator in online dating and today has a portfolio of apps including Tinder, Hinge, Archer, and OkCupid.
Why Are We Fans of MTCH?
- Customer spending is rising as the company has focused on monetization over the last two years, leading to 7.9% annual growth in its average revenue per user
- Healthy EBITDA margin of 35.7% shows it’s a well-run company with efficient processes
- MTCH is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its improved cash conversion implies it’s becoming a less capital-intensive business
Match Group’s stock price of $32.38 implies a valuation ratio of 8.4x forward EV/EBITDA. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free for active Edge members .
Itron (ITRI)
Trailing 12-Month Free Cash Flow Margin: 14.2%
Founded by a small group of engineers who wanted to build a more efficient way to read utility meters, Itron (NASDAQ: ITRI) offers energy and water management products for the utility industry, municipalities, and industrial customers.
Why Do We Like ITRI?
- Operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 46% over the last two years outstripped its revenue performance
- Free cash flow margin jumped by 7.1 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
At $93.14 per share, Itron trades at 14.3x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. 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-small-cap company Exlservice (+354% 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.
