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. Keeping that in mind, 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:
Boyd Gaming (BYD)
Trailing 12-Month Free Cash Flow Margin: 6.9%
Run by the Boyd family, Boyd Gaming (NYSE: BYD) is a diversified operator of gaming entertainment properties across the United States, offering casino games, hotel accommodations, and dining.
Why Do We Pass on BYD?
- Muted 12.7% annual revenue growth over the last five years shows its demand lagged behind its consumer discretionary peers
- Low free cash flow margin of 9.5% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Boyd Gaming’s stock price of $85.60 implies a valuation ratio of 11.5x forward P/E. Dive into our free research report to see why there are better opportunities than BYD.
Two Stocks to Watch:
AbbVie (ABBV)
Trailing 12-Month Free Cash Flow Margin: 35.3%
Born from a 2013 spinoff of Abbott Laboratories' pharmaceutical business, AbbVie (NYSE: ABBV) is a biopharmaceutical company that develops and markets medications for autoimmune diseases, cancer, neurological disorders, and other complex health conditions.
Why Could ABBV Be a Winner?
- Enormous revenue base of $62.82 billion gives it economies of scale and advantages over new entrants due to the industry’s regulatory complexity
- ABBV is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
- ROIC punches in at 17.5%, illustrating management’s expertise in identifying profitable investments
At $201.25 per share, AbbVie trades at 13.6x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Charles Schwab (SCHW)
Trailing 12-Month Free Cash Flow Margin: 20.2%
Founded in 1971 as a disruptive force challenging Wall Street's high fees and limited access, Charles Schwab (NYSE: SCHW) is a wealth management and brokerage firm that provides investment services, banking, and financial advice to individual investors and independent advisors.
Why Is SCHW a Good Business?
- Market share has increased this cycle as its 15.9% annual revenue growth over the last two years was exceptional
- Share buybacks catapulted its annual earnings per share growth to 33.9%, which outperformed its revenue gains over the last two years
- Stellar return on equity showcases management’s ability to surface highly profitable business ventures
Charles Schwab is trading at $88.64 per share, or 14.3x forward P/E. Is now the right time to buy? See for yourself in our full 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 (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
