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2 Cash-Producing Stocks with Exciting Potential and 1 We Brush Off
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.
Not all companies are created equal, and StockStory is here to surface the ones with real upside. That said, here are two cash-producing companies that reinvest wisely to drive long-term success and one that may face some trouble.
One Stock to Sell:
Cars.com (CARS)
Trailing 12-Month Free Cash Flow Margin: 16.5%
Originally started as a joint venture between several media companies including The Washington Post and The New York Times, Cars.com (NYSE:CARS) is a digital marketplace that connects new and used car buyers and sellers.
Why Is CARS Not Exciting?
- Market opportunities are plateauing as its dealer customers were flat over the last two years
- Anticipated sales growth of 2.6% for the next year implies demand will be shaky
- Earnings per share have contracted by 2% annually over the last three years, a headwind for returns as stock prices often echo long-term EPS performance
At $12.58 per share, Cars.com trades at 5.4x forward EV/EBITDA. If you’re considering CARS for your portfolio, see our FREE research report to learn more.
Two Stocks to Watch:
Micron (MU)
Trailing 12-Month Free Cash Flow Margin: 11%
Founded in the basement of a Boise, Idaho dental office in 1978, Micron (NYSE:MU) is a leading provider of memory chips used in thousands of devices across mobile, data centers, industrial, consumer, and automotive markets.
Why Do We Love MU?
- Impressive 61.7% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Projected revenue growth of 99% for the next 12 months is above its two-year trend, pointing to accelerating demand
- Earnings per share grew by 29.2% annually over the last five years, massively outpacing its peers
Micron’s stock price of $285.12 implies a valuation ratio of 7.7x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free for active Edge members.
Carvana (CVNA)
Trailing 12-Month Free Cash Flow Margin: 3%
Known for its glass tower car vending machines, Carvana (NYSE:CVNA) provides a convenient automotive shopping experience by offering an online platform for buying and selling used cars.
Why Do We Watch CVNA?
- Retail Units Sold have grown by 31.4% annually, allowing for more profitable cross-selling opportunities if it can build complementary products and features
- Incremental sales over the last three years have been highly profitable as its earnings per share increased by 38.5% annually, topping its revenue gains
- Free cash flow margin increased by 19.3 percentage points over the last few years, giving the company more capital to invest or return to shareholders
Carvana is trading at $438.61 per share, or 25x forward EV/EBITDA. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
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 5 Growth Stocks for this month. 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.