A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
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 excel at turning cash into shareholder value and one that may face some trouble.
One Stock to Sell:
DigitalBridge (DBRG)
Trailing 12-Month Free Cash Flow Margin: 189%
Transforming from a traditional real estate investor to a digital-focused powerhouse in 2021, DigitalBridge Group (NYSE: DBRG) is a global digital infrastructure investment firm that manages capital and operates assets across data centers, cell towers, fiber networks, and edge infrastructure.
Why Is DBRG Not Exciting?
- Annual sales declines of 37.5% for the past five years show its products and services struggled to connect with the market during this cycle
- Below-average return on equity indicates management struggled to find compelling investment opportunities
- EBITDA losses may force it to accept punitive lending terms or high-cost debt
DigitalBridge is trading at $9.73 per share, or 1.2x forward P/E. To fully understand why you should be careful with DBRG, check out our full research report (it’s free for active Edge members).
Two Stocks to Watch:
Hims & Hers Health (HIMS)
Trailing 12-Month Free Cash Flow Margin: 5.4%
Originally launched with a focus on stigmatized conditions like hair loss and sexual health, Hims & Hers Health (NYSE: HIMS) operates a consumer-focused telehealth platform that connects patients with healthcare providers for prescriptions and wellness products.
Why Should HIMS Be on Your Watchlist?
- Customer trends over the past two years show it’s maintaining a steady flow of new contracts that can potentially increase in value over time
- Free cash flow margin increased by 21.3 percentage points over the last five years, giving the company more capital to invest or return to shareholders
- Historical investments are beginning to pay off as its returns on capital are growing
At $39.90 per share, Hims & Hers Health trades at 36.2x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
Morningstar (MORN)
Trailing 12-Month Free Cash Flow Margin: 16.5%
Founded in 1984 by Joe Mansueto with just $80,000 in personal savings, Morningstar (NASDAQ: MORN) provides independent investment data, research, and analysis tools that help investors, advisors, and institutions make informed financial decisions.
Why Will MORN Beat the Market?
- Solid 12.3% annual revenue growth over the last five years indicates its offering’s solve complex business issues
- Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Stellar return on equity showcases management’s ability to surface highly profitable business ventures
Morningstar’s stock price of $216.93 implies a valuation ratio of 21.4x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .
Stocks We Like Even More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 9 Market-Beating Stocks. 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 Tecnoglass (+1,754% 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
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