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 leverage their financial strength to beat the competition and one best left off your watchlist.
One Stock to Sell:
Otis (OTIS)
Trailing 12-Month Free Cash Flow Margin: 11.4%
Credited with inventing the first hydraulic passenger elevator, Otis Worldwide (NYSE: OTIS) is an elevator and escalator manufacturing, installation and service company.
Why Are We Out on OTIS?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Anticipated sales growth of 4.4% for the next year implies demand will be shaky
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 5.4% annually
Otis is trading at $77.13 per share, or 18.3x forward P/E. If you’re considering OTIS for your portfolio, see our FREE research report to learn more.
Two Stocks to Watch:
Iridium (IRDM)
Trailing 12-Month Free Cash Flow Margin: 34.8%
With a constellation of 66 low-earth orbit satellites providing coverage to every inch of the planet, Iridium Communications (NASDAQ: IRDM) operates a global satellite network that provides voice and data services to customers in remote areas where traditional telecommunications are unavailable.
Why Is IRDM Interesting?
- Solid 8.4% annual revenue growth over the last five years indicates its offering’s solve complex business issues
- Adjusted operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
- Share repurchases over the last two years enabled its annual earnings per share growth to outpace its revenue gains
Iridium’s stock price of $39.04 implies a valuation ratio of 29.8x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Tradeweb Markets (TW)
Trailing 12-Month Free Cash Flow Margin: 50.7%
Founded in 1996 as one of the pioneers in electronic bond trading, Tradeweb Markets (NASDAQ: TW) builds and operates electronic marketplaces that connect financial institutions for trading across rates, credit, equities, and money markets.
Why Are We Backing TW?
- Market share has increased this cycle as its 23.4% annual revenue growth over the last two years was exceptional
- Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 23.5% annually
At $111.59 per share, Tradeweb Markets trades at 27.6x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum - both boxes checked at the same time.
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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.
