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. Keeping that in mind, here are two cash-producing companies that excel at turning cash into shareholder value and one best left off your watchlist.
One Stock to Sell:
ICU Medical (ICUI)
Trailing 12-Month Free Cash Flow Margin: 2.6%
Founded in 1984 and named for its initial focus on intensive care units, ICU Medical (NASDAQ: ICUI) develops and manufactures medical products for infusion therapy, vascular access, and vital care applications used in hospitals and other healthcare settings.
Why Do We Avoid ICUI?
- Muted 1.7% annual revenue growth over the last two years shows its demand lagged behind its healthcare peers
- Forecasted revenue decline of 10.6% for the upcoming 12 months implies demand will fall off a cliff
- Earnings per share fell by 19.1% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
At $126.61 per share, ICU Medical trades at 17.1x forward P/E. Check out our free in-depth research report to learn more about why ICUI doesn’t pass our bar.
Two Stocks to Watch:
e.l.f. Beauty (ELF)
Trailing 12-Month Free Cash Flow Margin: 10.1%
Short for "eyes, lips, face", e.l.f. Beauty (NYSE: ELF) is a developer of high-quality beauty products at accessible price points.
Why Should You Buy ELF?
- Market share has increased over the last three years as its 47.6% annual revenue growth was exceptional
- Earnings growth has trumped its peers over the last three years as its EPS has compounded at 48.6% annually
- Free cash flow margin grew by 6.5 percentage points over the last year, giving the company more chips to play with
e.l.f. Beauty’s stock price of $129.27 implies a valuation ratio of 33x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Watts Water Technologies (WTS)
Trailing 12-Month Free Cash Flow Margin: 13.9%
Founded in 1874, Watts Water (NYSE: WTS) specializes in manufacturing water products and systems for residential, commercial, and industrial applications globally.
Why Do We Like WTS?
- Offerings are difficult to replicate at scale and result in a best-in-class gross margin of 45.5%
- Operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 20.7% exceeded its revenue gains over the last five years
Watts Water Technologies is trading at $277 per share, or 28.6x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
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Don’t let fear keep you from great opportunities and take a look at Top 6 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 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
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