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 is one cash-producing company that leverages its financial strength to beat its competitors and two that may struggle to keep up.
Two Stocks to Sell:
Kraft Heinz (KHC)
Trailing 12-Month Free Cash Flow Margin: 15.8%
The result of a 2015 mega-merger between Kraft and Heinz, Kraft Heinz (NASDAQ: KHC) is a packaged foods giant whose products span coffee to cheese to packaged meat.
Why Are We Out on KHC?
- Shrinking unit sales over the past two years imply it may need to invest in product improvements to get back on track
- Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
- Overall productivity fell over the last year as its plummeting sales were accompanied by a decline in its operating margin
Kraft Heinz’s stock price of $23.24 implies a valuation ratio of 11.6x forward P/E. Dive into our free research report to see why there are better opportunities than KHC.
Bruker (BRKR)
Trailing 12-Month Free Cash Flow Margin: 1.5%
With roots dating back to the pioneering days of nuclear magnetic resonance technology, Bruker (NASDAQ: BRKR) develops and manufactures high-performance scientific instruments that enable researchers and industrial analysts to explore materials at microscopic, molecular, and cellular levels.
Why Are We Wary of BRKR?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 7.7 percentage points
- Eroding returns on capital suggest its historical profit centers are aging
At $44 per share, Bruker trades at 20x forward P/E. Check out our free in-depth research report to learn more about why BRKR doesn’t pass our bar.
One Stock to Watch:
TJX (TJX)
Trailing 12-Month Free Cash Flow Margin: 8.1%
Initially based on a strategy of buying excess inventory from manufacturers or other retailers, TJX (NYSE: TJX) is an off-price retailer that sells brand-name apparel and other goods at prices much lower than department stores.
Why Should TJX Be on Your Watchlist?
- Same-store sales growth averaged 3.9% over the past two years, showing it’s bringing new and repeat shoppers into its stores
- Massive revenue base of $60.37 billion makes up for its weaker gross margin and makes it a household name that influences purchasing decisions
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures, and its rising returns show it’s making even more lucrative bets
TJX is trading at $147.00 per share, or 29.4x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
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.
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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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
