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. That said, here are two cash-producing companies that excel at turning cash into shareholder value and one that may struggle to keep up.
One Stock to Sell:
Pilgrim's Pride (PPC)
Trailing 12-Month Free Cash Flow Margin: 1.7%
Offering everything from pre-marinated to frozen chicken, Pilgrim’s Pride (NASDAQ:PPC) produces, processes, and distributes chicken products to retailers and food service customers.
Why Is PPC Risky?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 2.6% for the last three years
- Commoditized products, bad unit economics, and high competition are reflected in its low gross margin of 11.7%
- Efficiency has decreased over the last year as its operating margin fell by 4.5 percentage points
Pilgrim's Pride is trading at $30.79 per share, or 12.9x forward P/E. Check out our free in-depth research report to learn more about why PPC doesn’t pass our bar.
Two Stocks to Watch:
Hexcel (HXL)
Trailing 12-Month Free Cash Flow Margin: 12.9%
Founded shortly after World War II by a group of engineers from UC Berkley, Hexcel (NYSE:HXL) manufactures lightweight composite materials primarily for the aerospace and defense sectors.
Why Should HXL Be on Your Watchlist?
- Demand will likely accelerate over the next 12 months as its forecasted revenue growth of 10.8% is above its two-year trend
- Share repurchases over the last five years enabled its annual earnings per share growth of 44.8% to outpace its revenue gains
- Free cash flow margin expanded by 7.9 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
Hexcel’s stock price of $94.61 implies a valuation ratio of 36.4x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Pfizer (PFE)
Trailing 12-Month Free Cash Flow Margin: 17.2%
With roots dating back to 1849 when two German immigrants opened a fine chemicals business in Brooklyn, Pfizer (NYSE:PFE) is a global biopharmaceutical company that discovers, develops, manufactures, and sells medicines and vaccines for a wide range of diseases and conditions.
Why Do We Like PFE?
- Massive revenue base of $63.7 billion in a highly regulated sector makes the company difficult to replace, giving it meaningful negotiating power
- Adjusted operating profits increased over the last two years as the company gained some leverage on its fixed costs and became more efficient
- ROIC punches in at 17.5%, illustrating management’s expertise in identifying profitable investments
At $28.04 per share, Pfizer trades at 10.2x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.