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. That said, here is one cash-producing company that leverages its financial strength to beat its competitors and two that may struggle to keep up.
Two Stocks to Sell:
Sotera Health Company (SHC)
Trailing 12-Month Free Cash Flow Margin: 10%
With a critical role in ensuring the safety of millions of patients worldwide, Sotera Health (NASDAQGS:SHC) provides sterilization services, lab testing, and advisory services to ensure medical devices, pharmaceuticals, and food products are safe for use.
Why Are We Wary of SHC?
- Muted 7.3% annual revenue growth over the last five years shows its demand lagged behind its healthcare peers
- Revenue base of $1.12 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Poor free cash flow margin of 1.1% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
At $16.50 per share, Sotera Health Company trades at 20.2x forward P/E. Dive into our free research report to see why there are better opportunities than SHC.
Equifax (EFX)
Trailing 12-Month Free Cash Flow Margin: 16.8%
Holding detailed financial records on over 800 million consumers worldwide and dating back to 1899, Equifax (NYSE:EFX) is a global data analytics company that collects, analyzes, and sells consumer and business credit information to lenders, employers, and other businesses.
Why Does EFX Give Us Pause?
- Efficiency has decreased over the last five years as its adjusted operating margin fell by 5.3 percentage points
- Incremental sales over the last five years were less profitable as its 3.7% annual earnings per share growth lagged its revenue gains
- Underwhelming 11.3% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its falling returns suggest its earlier profit pools are drying up
Equifax’s stock price of $228.74 implies a valuation ratio of 27.1x forward P/E. Read our free research report to see why you should think twice about including EFX in your portfolio.
One Stock to Buy:
The Trade Desk (TTD)
Trailing 12-Month Free Cash Flow Margin: 27.8%
Built as an alternative to "walled garden" advertising ecosystems, The Trade Desk (NASDAQ:TTD) provides a cloud-based platform that helps advertisers and agencies plan, manage, and optimize digital advertising campaigns across multiple channels and devices.
Why Are We Backing TTD?
- Impressive 24.4% annual revenue growth over the last two years indicates it’s winning market share
- Average billings growth of 22.6% over the last year enhances its liquidity and shows there is steady demand for its products
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
The Trade Desk is trading at $53.72 per share, or 8.7x forward price-to-sales. Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
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-small-cap company Comfort Systems (+782% 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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