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.
Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. That said, here is one cash-producing company that excels at turning cash into shareholder value and two that may face some trouble.
Two Stocks to Sell:
News Corp (NWSA)
Trailing 12-Month Free Cash Flow Margin: 6.8%
Established in 2013 after a restructuring, News Corp (NASDAQ: NWSA) is a multinational conglomerate known for its news publishing, broadcasting, digital media, and book publishing.
Why Is NWSA Risky?
- Sales tumbled by 1.3% annually over the last five years, showing consumer trends are working against its favor
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 2.6%
- Underwhelming 6.5% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its shrinking returns suggest its past profit sources are losing steam
News Corp’s stock price of $28.55 implies a valuation ratio of 29x forward P/E. If you’re considering NWSA for your portfolio, see our FREE research report to learn more.
FedEx (FDX)
Trailing 12-Month Free Cash Flow Margin: 2.7%
Sporting one of the largest air cargo fleets in the world, FedEx (NYSE: FDX) is a global provider of parcel and cargo delivery services.
Why Are We Out on FDX?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last two years
- Poor free cash flow margin of 2.4% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
FedEx is trading at $242.25 per share, or 12.9x forward P/E. Dive into our free research report to see why there are better opportunities than FDX.
One Stock to Watch:
Colgate-Palmolive (CL)
Trailing 12-Month Free Cash Flow Margin: 16.9%
Formed after the 1928 combination between toothpaste maker Colgate and soap maker Palmolive-Peet, Colgate-Palmolive (NYSE: CL) is a consumer products company that focuses on personal, household, and pet products.
Why Does CL Stand Out?
- Unique products and pricing power result in a best-in-class gross margin of 60.2%
- Strong free cash flow margin of 16.8% enables it to reinvest or return capital consistently
- ROIC punches in at 40.1%, illustrating management’s expertise in identifying profitable investments, and its rising returns show it’s making even more lucrative bets
At $78.32 per share, Colgate-Palmolive trades at 20.6x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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
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