A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
Luckily for you, we built StockStory to help you separate the good from the bad. That said, here are two cash-producing companies that reinvest wisely to drive long-term success and one best left off your watchlist.
One Stock to Sell:
Carrier Global (CARR)
Trailing 12-Month Free Cash Flow Margin: 9.8%
Founded by the inventor of air conditioning, Carrier Global (NYSE: CARR) manufactures heating, ventilation, air conditioning, and refrigeration products.
Why Do We Pass on CARR?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 2.8% annually
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
At $60.85 per share, Carrier Global trades at 22.3x forward P/E. Dive into our free research report to see why there are better opportunities than CARR.
Two Stocks to Watch:
Shopify (SHOP)
Trailing 12-Month Free Cash Flow Margin: 17.4%
Starting with just three people selling snowboards online in 2004, Shopify (NASDAQ: SHOP) provides a comprehensive platform that enables merchants of all sizes to create, manage and grow their businesses across multiple sales channels.
Why Is SHOP a Good Business?
- Winning new contracts that can potentially increase in value as its billings growth has averaged 30.7% over the last year
- Revenue outlook for the upcoming 12 months is outstanding and shows it’s on track to gain market share
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
Shopify’s stock price of $130.61 implies a valuation ratio of 11.6x forward price-to-sales. Is now the right time to buy? See for yourself in our full research report, it’s free.
Berkshire Hathaway (BRK.A)
Trailing 12-Month Free Cash Flow Margin: 6.9%
Led by legendary investor Warren Buffett since 1965, transforming it from a struggling textile manufacturer into a corporate giant, Berkshire Hathaway (NYSE: BRK.A) is a diversified holding company that owns businesses across insurance, railroads, utilities, manufacturing, retail, and services sectors.
Why Is BRK.A on Our Radar?
- Earnings per share grew by 18.9% annually over the last two years and easily exceeded the peer group average
- Balance sheet strength has increased this cycle as its 15.9% annual tangible book value per share growth over the last five years was exceptional
- ROE punches in at 13.2%, illustrating management’s expertise in identifying profitable investments
Berkshire Hathaway is trading at $701,000 per share, or 21.4x 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
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
