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.
Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. That said, here are two cash-producing companies that excel at turning cash into shareholder value and one best left off your watchlist.
One stock to sell:
Corcept (CORT)
Trailing 12-Month Free Cash Flow Margin: 12.9%
Focusing on the powerful stress hormone that affects everything from metabolism to immune function, Corcept Therapeutics (NASDAQ: CORT) develops and markets medications that modulate cortisol to treat endocrine disorders, cancer, and neurological diseases.
Why Is CORT Not Exciting?
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 16.1% annually while its revenue grew
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 25.7 percentage points
- Eroding returns on capital suggest its historical profit centers are aging
At $117.49 per share, Corcept trades at 26.4x forward P/E. If you’re considering CORT for your portfolio, see our FREE research report to learn more.
Two stocks to watch:
Abercrombie and Fitch (ANF)
Trailing 12-Month Free Cash Flow Margin: 10.6%
Founded as an outdoor and sporting brand, Abercrombie & Fitch (NYSE: ANF) evolved to become a specialty retailer that sells its own brand of fashionable clothing to young adults.
Why Will ANF Beat the Market?
- Locations open for at least a year are seeing increased demand as same-store sales have averaged 5% growth over the past two years
- Differentiated product assortment is reflected in its best-in-class gross margin of 63.2%
- Share buybacks catapulted its annual earnings per share growth to 76.3%, which outperformed its revenue gains over the last three years
Abercrombie and Fitch’s stock price of $160.12 implies a valuation ratio of 12.9x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Chevron (CVX)
Trailing 12-Month Free Cash Flow Margin: 12.5%
Operating everything from deepwater drilling rigs to corner gas stations, Chevron (NYSE: CVX) explores for, produces, and transports crude oil and natural gas, then refines that crude oil into gasoline, diesel, and other petroleum products.
Why Are We Fans of CVX?
- Market share has increased this cycle as its 6.3% annual revenue growth over the last ten years was exceptional
- Dominant market position is represented by its $215.3 billion in revenue and gives it fixed cost leverage when sales grow
- Solid free cash flow generation relative to most peers gives it a cushion and grants it various reinvestment opportunities
Chevron is trading at $227.56 per share, or 11.9x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Stocks we like even more
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
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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-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
