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3 Cash-Producing Stocks on Our Watchlist
Businesses with strong free cash flow tend to be more adaptable and resilient. Some of these companies shine bright by using their cash wisely to strengthen their market positions.
Identifying the most effective companies isn’t easy, and that’s why we started StockStory. That said, here are three cash-producing companies that reinvest wisely to drive long-term success.
Karat Packaging (KRT)
Trailing 12-Month Free Cash Flow Margin: 10.4%
Founded as Lollicup, Karat Packaging (NASDAQ: KRT) distributes and manufactures environmentally-friendly disposable foodservice packaging solutions.
What Makes KRT Stand Out?
- Offerings and unique value proposition resonate with customers, as seen in its above-market 9.8% annual sales growth over the last two years
- Earnings per share have massively outperformed its peers over the last two years, increasing by 25.7% annually
- Free cash flow margin expanded by 13.8 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
Karat Packaging’s stock price of $47.76 implies a valuation ratio of 25.3x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Vertex Pharmaceuticals (VRTX)
Trailing 12-Month Free Cash Flow Margin: 30.2%
Founded in 1989 with a mission to create medicines that treat the underlying causes of disease rather than just symptoms, Vertex Pharmaceuticals (NASDAQ:VRTX) develops and markets transformative medicines for serious diseases, with a focus on cystic fibrosis, sickle cell disease, and pain management.
Why Are We Positive on VRTX?
- Annual revenue growth of 20.5% over the past five years was outstanding, reflecting market share gains this cycle
- Adjusted operating margin expanded by 38.6 percentage points over the last two years as it scaled and became more efficient
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
Vertex Pharmaceuticals is trading at $512.19 per share, or 25.4x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
CLEAR Secure (YOU)
Trailing 12-Month Free Cash Flow Margin: 50.8%
Recognized by its signature blue lanes and biometric pods at airport checkpoints across America, CLEAR Secure (NYSE:YOU) provides biometric identity verification technology that allows subscribers to bypass regular security lines at airports and access secure experiences at various venues.
Why Are We Bullish on YOU?
- Annual revenue growth of 36% over the past five years was outstanding, reflecting market share gains
- Well-designed software integrates seamlessly with other workflows, enabling swift payback periods on marketing expenses and customer growth at scale
- YOU is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
At $43.84 per share, CLEAR Secure trades at 3.9x forward price-to-sales. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
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.