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.
Not all companies are created equal, and StockStory is here to surface the ones with real upside. That said, 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:
IDEX (IEX)
Trailing 12-Month Free Cash Flow Margin: 17.1%
Founded in 1988, IDEX (NYSE: IEX) is a global manufacturer specializing in highly engineered products such as pumps, flow meters, and fluidics systems for various industries.
Why Do We Avoid IEX?
- 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
- Earnings per share fell by 3.1% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
- Waning returns on capital imply its previous profit engines are losing steam
At $180.33 per share, IDEX trades at 21.9x forward P/E. If you’re considering IEX for your portfolio, see our FREE research report to learn more.
Two Stocks to Watch:
Commvault (CVLT)
Trailing 12-Month Free Cash Flow Margin: 19.1%
Born from the need to create ironclad protection in an increasingly dangerous digital world, Commvault (NASDAQ: CVLT) provides data protection and cyber resilience software that helps organizations secure, back up, and recover their data across on-premises, hybrid, and multi-cloud environments.
Why Do We Like CVLT?
- Billings have averaged 25.4% growth over the last year, showing it’s securing new contracts that could potentially increase in value over time
- Software is difficult to replicate at scale and results in a stellar gross margin of 81.5%
- Well-designed software integrates seamlessly with other workflows, enabling swift payback periods on marketing expenses and customer growth at scale
Commvault is trading at $128.35 per share, or 4.7x forward price-to-sales. Is now the right time to buy? See for yourself in our full research report, it’s free for active Edge members.
DoorDash (DASH)
Trailing 12-Month Free Cash Flow Margin: 15.8%
Founded by Stanford students with the intent to build “the local, on-demand FedEx", DoorDash (NYSE: DASH) operates an on-demand food delivery platform.
Why Are We Bullish on DASH?
- Orders have increased by an average of 20% annually, giving it the potential for margin-accretive growth if it can develop valuable complementary products and features
- Incremental sales over the last three years have been highly profitable as its earnings per share increased by 1,009% annually, topping its revenue gains
- Free cash flow margin grew by 12.6 percentage points over the last few years, giving the company more chips to play with
DoorDash’s stock price of $233.78 implies a valuation ratio of 29.4x forward EV/EBITDA. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.
