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. That said, here are two cash-producing companies that reinvest wisely to drive long-term success and one that may face some trouble.
One Stock to Sell:
Hayward (HAYW)
Trailing 12-Month Free Cash Flow Margin: 17.6%
Credited with introducing the first variable-speed pool pump, Hayward (NYSE: HAYW) makes residential and commercial pool equipment and accessories.
Why Are We Hesitant About HAYW?
- Sales stagnated over the last five years and signal the need for new growth strategies
- Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 3.1 percentage points
- Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
Hayward is trading at $12.88 per share, or 14.1x forward P/E. Dive into our free research report to see why there are better opportunities than HAYW.
Two Stocks to Buy:
DoorDash (DASH)
Trailing 12-Month Free Cash Flow Margin: 13.5%
Founded by Stanford students with the intent to build “the local, on-demand FedEx", DoorDash (NASDAQ: DASH) operates an on-demand food delivery platform.
Why Is DASH a Good Business?
- Orders have increased by an average of 23.5% annually, giving it the potential for margin-accretive growth if it can develop valuable complementary products and features
- Healthy EBITDA margin of 20% shows it’s a well-run company with efficient processes, and it turbocharged its profits by achieving some fixed cost leverage
- Incremental sales over the last three years have been highly profitable as its earnings per share increased by 98.3% annually, topping its revenue gains
DoorDash’s stock price of $194.82 implies a valuation ratio of 19.4x forward EV/EBITDA. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Eli Lilly (LLY)
Trailing 12-Month Free Cash Flow Margin: 22.8%
Founded in 1876 by a Civil War veteran and pharmacist frustrated with the poor quality of medicines, Eli Lilly (NYSE: LLY) discovers, develops, and manufactures pharmaceutical products for conditions including diabetes, obesity, cancer, immunological disorders, and neurological diseases.
Why Do We Love LLY?
- Impressive 43.1% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Adjusted operating margin improvement of 18.7 percentage points over the last two years demonstrates its ability to scale efficiently
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 31.4% exceeded its revenue gains over the last five years
At $1,166 per share, Eli Lilly trades at 28.3x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
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-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
