Generating cash is essential for any business, but not all cash-rich companies are great investments. Some produce plenty of cash but fail to allocate it effectively, leading to missed opportunities.
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 face some trouble.
Two Stocks to Sell:
Moog (MOG.A)
Trailing 12-Month Free Cash Flow Margin: 1%
Responsible for the flight control actuation system integrated in the B-2 stealth bomber, Moog (NYSE:MOG.A) provides precision motion control solutions used in aerospace and defense applications
Why Are We Cautious About MOG.A?
- Annual revenue growth of 4.9% over the last five years was below our standards for the industrials sector
- Free cash flow margin shrank by 6.6 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Low returns on capital reflect management’s struggle to allocate funds effectively
At $234.42 per share, Moog trades at 25.2x forward P/E. If you’re considering MOG.A for your portfolio, see our FREE research report to learn more.
CSX (CSX)
Trailing 12-Month Free Cash Flow Margin: 11.6%
Established as part of the Chessie System and Seaboard Coast Line Industries merger, CSX (NASDAQ:CSX) is a transportation company specializing in freight rail services.
Why Do We Steer Clear of CSX?
- Weak unit sales over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
- Sales were less profitable over the last two years as its earnings per share fell by 6.5% annually, worse than its revenue declines
- Free cash flow margin dropped by 18.9 percentage points over the last five years, implying the company became more capital intensive as competition picked up
CSX is trading at $36.32 per share, or 19.7x forward P/E. To fully understand why you should be careful with CSX, check out our full research report (it’s free for active Edge members).
One Stock to Buy:
LPL Financial (LPLA)
Trailing 12-Month Free Cash Flow Margin: 4.9%
As the nation's largest independent broker-dealer with no proprietary products of its own, LPL Financial (NASDAQ:LPLA) provides technology, compliance, and business support services to independent financial advisors and institutions who manage investments for retail clients.
Why Will LPLA Outperform?
- Annual revenue growth of 26.4% over the last two years was superb and indicates its market share increased during this cycle
- Performance over the past five years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 23.7% outpaced its revenue gains
- Market-beating return on equity illustrates that management has a knack for investing in profitable ventures
LPL Financial’s stock price of $374.80 implies a valuation ratio of 16.2x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in 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 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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