A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
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 excel at turning cash into shareholder value and one best left off your watchlist.
One Stock to Sell:
Howard Hughes Holdings (HHH)
Trailing 12-Month Free Cash Flow Margin: 28.7%
Named after the eccentric business magnate and aviator whose legacy lives on in real estate development, Howard Hughes Holdings (NYSE: HHH) develops, owns, and manages master-planned communities and commercial properties across the United States.
Why Do We Pass on HHH?
- 19.7% annual revenue growth over the last five years was slower than its consumer discretionary peers
- Returns on capital are increasing as management makes relatively better investment decisions
- High net-debt-to-EBITDA ratio of 7× increases the risk of forced asset sales or dilutive financing if operational performance weakens
Howard Hughes Holdings’s stock price of $64.30 implies a valuation ratio of 1.9x forward price-to-sales. To fully understand why you should be careful with HHH, check out our full research report (it’s free).
Two Stocks to Watch:
Seagate (STX)
Trailing 12-Month Free Cash Flow Margin: 21.9%
One of two remaining major hard drive manufacturers after decades of industry consolidation, Seagate (NASDAQ: STX) manufactures hard disk drives and solid state drives that store data in data centers, cloud systems, and consumer devices.
Why Will STX Outperform?
- Impressive 32.6% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
- Free cash flow margin jumped by 9.3 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Seagate is trading at $741.48 per share, or 33.7x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Nutanix (NTNX)
Trailing 12-Month Free Cash Flow Margin: 28.9%
Originally pioneering hyperconverged infrastructure to break down traditional data center silos, Nutanix (NASDAQ: NTNX) provides a unified software platform that enables organizations to run applications and manage data across private, public, and hybrid cloud environments.
Why Are We Fans of NTNX?
- Prominent and differentiated software leads to a best-in-class gross margin of 87.1%
- User-friendly software enables clients to ramp up spending quickly, leading to the speedy recovery of customer acquisition costs
- Robust free cash flow margin of 28.9% gives it many options for capital deployment
At $47.47 per share, Nutanix trades at 4.5x forward price-to-sales. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum - both boxes checked at the same time.
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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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
