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 is one cash-producing company that excels at turning cash into shareholder value and two that may face some trouble.
Two Stocks to Sell:
Molson Coors (TAP)
Trailing 12-Month Free Cash Flow Margin: 9.9%
Sporting an impressive roster of iconic beer brands, Molson Coors (NYSE:TAP) is a global brewing giant with a rich history dating back more than two centuries.
Why Does TAP Worry Us?
- Declining unit sales over the past two years indicate demand is soft and that the company may need to revise its product strategy
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 1.6%
- Low returns on capital reflect management’s struggle to allocate funds effectively
Molson Coors’s stock price of $52 implies a valuation ratio of 8.1x forward P/E. If you’re considering TAP for your portfolio, see our FREE research report to learn more.
XPO (XPO)
Trailing 12-Month Free Cash Flow Margin: 2.7%
Owning a mobile game simulating freight operations for the Tour de France, XPO (NYSE:XPO) is a transportation company specializing in expedited shipping services.
Why Are We Out on XPO?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 10.7% annually over the last five years
- Earnings per share have dipped by 1.5% annually over the past five years, which is concerning because stock prices follow EPS over the long term
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 5.7 percentage points
XPO is trading at $118.47 per share, or 29.1x forward P/E. Dive into our free research report to see why there are better opportunities than XPO.
One Stock to Watch:
Ingersoll Rand (IR)
Trailing 12-Month Free Cash Flow Margin: 18.8%
Started with the invention of the steam drill, Ingersoll Rand (NYSE:IR) provides mission-critical air, gas, liquid, and solid flow creation solutions.
Why Are We Fans of IR?
- Operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
- Incremental sales over the last five years have been highly profitable as its earnings per share increased by 17.2% annually, topping its revenue gains
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its recently improved profitability means it has even more resources to invest or distribute
At $83.12 per share, Ingersoll Rand trades at 24.1x 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
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.