A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
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 struggle to keep up.
One Stock to Sell:
Mondelez (MDLZ)
Trailing 12-Month Free Cash Flow Margin: 7.8%
Founded as Nabisco in 1903, Mondelez (NASDAQ: MDLZ) is a packaged snacks powerhouse best known for its Oreo, Cadbury, Toblerone, Ritz, and Trident brands.
Why Are We Hesitant About MDLZ?
- Declining unit sales over the past two years suggest it might have to lower prices to stimulate growth
- Estimated sales growth of 2.6% for the next 12 months implies demand will slow from its three-year trend
- Earnings per share fell by 3% annually over the last three years while its revenue grew, showing its incremental sales were much less profitable
At $57.96 per share, Mondelez trades at 18x forward P/E. If you’re considering MDLZ for your portfolio, see our FREE research report to learn more.
Two Stocks to Watch:
Mueller Water Products (MWA)
Trailing 12-Month Free Cash Flow Margin: 12.1%
As one of the oldest companies in the water infrastructure industry, Mueller (NYSE: MWA) is a provider of water infrastructure products and flow control systems for various sectors.
Why Does MWA Stand Out?
- Operating margin improvement of 8.9 percentage points over the last five years demonstrates its ability to scale efficiently
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 29.2% annually, topping its revenue gains
- Free cash flow margin increased by 12.1 percentage points over the last five years, giving the company more capital to invest or return to shareholders
Mueller Water Products’s stock price of $21.79 implies a valuation ratio of 14x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
Hims & Hers Health (HIMS)
Trailing 12-Month Free Cash Flow Margin: 2.4%
Originally launched with a focus on stigmatized conditions like hair loss and sexual health, Hims & Hers Health (NYSE: HIMS) operates a consumer-focused telehealth platform that connects patients with healthcare providers for prescriptions and wellness products.
Why Are We Fans of HIMS?
- Customer trends over the past two years show it’s maintaining a steady flow of new contracts that can potentially increase in value over time
- Free cash flow margin expanded by 15.9 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
- Historical investments are beginning to pay off as its returns on capital are growing
Hims & Hers Health is trading at $29.70 per share, or 22.8x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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.
