Cash-generating companies often have the flexibility to invest, return capital to shareholders, or navigate downturns. The best of these businesses not only accumulate cash but deploy it strategically for growth.
Not all companies are created equal, and StockStory is here to surface the ones with real upside. That said, here are three cash-producing companies that leverage their financial strength to beat the competition.
Workiva (WK)
Trailing 12-Month Free Cash Flow Margin: 18.6%
Nicknamed "the Excel killer" by some finance professionals for its ability to eliminate spreadsheet chaos, Workiva (NYSE:WK) provides a cloud-based platform that enables organizations to streamline financial reporting, ESG, and compliance processes with connected data and automation.
Why Are We Positive on WK?
- Customers view its software as mission-critical to their operations as its ARR has averaged 22.1% growth over the last year
- Software is difficult to replicate at scale and leads to a premier gross margin of 79.4%
- Software platform has product-market fit given the rapid recovery of its customer acquisition costs
Workiva is trading at $51.93 per share, or 2.9x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
QuinStreet (QNST)
Trailing 12-Month Free Cash Flow Margin: 8%
Founded during the dot-com era in 1999 and specializing in high-intent consumer traffic, QuinStreet (NASDAQ:QNST) operates digital performance marketplaces that connect clients in financial and home services with consumers actively searching for their products.
Why Should You Buy QNST?
- Market share has increased this cycle as its 47.2% annual revenue growth over the last two years was exceptional
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 628% outpaced its revenue gains
- Historical investments are beginning to pay off as its returns on capital are growing
QuinStreet’s stock price of $12.14 implies a valuation ratio of 8.4x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Motorola Solutions (MSI)
Trailing 12-Month Free Cash Flow Margin: 21%
Born from the company that invented the first portable handheld police radio in 1940, Motorola Solutions (NYSE:MSI) provides mission-critical communications, video security, and command center software solutions for public safety agencies and enterprise customers.
Why Is MSI a Top Pick?
- Annual revenue growth of 9.5% over the last five years was superb and indicates its market share increased during this cycle
- Adjusted operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its growing cash flow gives it even more resources to deploy
At $414.50 per share, Motorola Solutions trades at 23.9x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
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