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 best left off your watchlist.
One Stock to Sell:
Wendy's (WEN)
Trailing 12-Month Free Cash Flow Margin: 10.1%
Founded by Dave Thomas in 1969, Wendy’s (NASDAQ: WEN) is a renowned fast-food chain known for its fresh, never-frozen beef burgers, flavorful menu options, and commitment to quality.
Why Do We Steer Clear of WEN?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Demand will likely fall over the next 12 months as Wall Street expects flat revenue
- 7× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Wendy's is trading at $6.84 per share, or 12x forward P/E. Read our free research report to see why you should think twice about including WEN in your portfolio.
Two Stocks to Watch:
Crane NXT (CXT)
Trailing 12-Month Free Cash Flow Margin: 13.6%
Born from a corporate transformation completed in 2023, Crane NXT (NYSE: CXT) provides specialized technology solutions for payment processing, banknote security, and authentication systems for financial institutions and businesses.
Why Do We Like CXT?
- Demand is greater than supply as the company’s 15.3% average backlog growth over the past two years shows it’s securing new contracts and accumulating more orders than it can fulfill
- Economies of scale give it more fixed cost leverage than its smaller competitors
- Market share is on track to rise over the next 12 months as its 16.3% projected revenue growth implies demand will accelerate from its two-year trend
Crane NXT’s stock price of $46.93 implies a valuation ratio of 10.5x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
TD SYNNEX (SNX)
Trailing 12-Month Free Cash Flow Margin: 1.9%
Serving as the crucial middleman in the technology supply chain, TD SYNNEX (NYSE: SNX) is a global technology distributor that connects thousands of IT manufacturers with resellers, helping businesses access hardware, software, and technology solutions.
Why Will SNX Outperform?
- Annual revenue growth of 25.6% over the past five years was outstanding, reflecting market share gains this cycle
- Unparalleled revenue scale of $65.14 billion gives it an edge in distribution
- Free cash flow margin grew by 3.4 percentage points over the last five years, giving the company more chips to play with
At $283 per share, TD SYNNEX trades at 16.8x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
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