Businesses with strong free cash flow tend to be more adaptable and resilient. Some of these companies shine bright by using their cash wisely to strengthen their market positions.

Not all companies are created equal, and StockStory is here to surface the ones with real upside. Keeping that in mind, here are three cash-producing companies that excel at turning cash into shareholder value.

Urban Outfitters (URBN)

Trailing 12-Month Free Cash Flow Margin: 5.1%

Founded as a purveyor of vintage items, Urban Outfitters (NASDAQ: URBN) now largely sells new apparel and accessories to teens and young adults seeking on-trend fashion.

Why Do We Like URBN?

1. Store expansion strategy is justified by its healthy same-store sales
2. Locations open for at least a year are seeing increased demand as same-store sales have averaged 4.6% growth over the past two years
3. Performance over the past three years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue

At $64.87 per share, Urban Outfitters trades at 11x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.

Ulta (ULTA)

Trailing 12-Month Free Cash Flow Margin: 8.6%

Offering high-end prestige brands as well as lower-priced, mass-market ones, Ulta Beauty (NASDAQ: ULTA) is an American retailer that sells makeup, skincare, haircare, and fragrance products.

Why Are We Positive On ULTA?

1. Aggressive strategy of rolling out new stores to gobble up whitespace is prudent given its same-store sales growth
2. Comparable store sales rose by 3% on average over the past two years, demonstrating its ability to drive increased spending at existing locations
3. Industry-leading 32.7% return on capital demonstrates management’s skill in finding high-return investments

Ulta’s stock price of $537.41 implies a valuation ratio of 18.8x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.

Devon Energy (DVN)

Trailing 12-Month Free Cash Flow Margin: 18.3%

With operations spanning from the oil-rich Delaware Basin to the Bakken formation of North Dakota, Devon Energy (NYSE: DVN) explores for and produces oil, natural gas, and natural gas liquids from wells drilled across the United States.

Why Will DVN Outperform?

1. Annual revenue growth of 27.8% over the last five years was superb and indicates its market share increased during this cycle
2. Dominant market position is represented by its $17.02 billion in revenue and gives it fixed cost leverage when sales grow
3. Strong free cash flow margin of 22.3% enables it to reinvest or return capital consistently

Devon Energy is trading at $49.50 per share, or 9.7x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.

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