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 leverage their financial strength to beat the competition and one that may struggle to keep up.
One Stock to Sell:
Salesforce (CRM)
Trailing 12-Month Free Cash Flow Margin: 34.2%
With its cloud-based platform named after its stock ticker symbol CRM (Customer Relationship Management), Salesforce (NYSE: CRM) provides customer relationship management software that helps businesses connect with their customers across sales, service, marketing, and commerce.
Why Are We Cautious About CRM?
- Average billings growth of 10.5% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 9.6%
- Operating profits increased over the last year as the company gained some leverage on its fixed costs and became more efficient
At $175.30 per share, Salesforce trades at 3.3x forward price-to-sales. Check out our free in-depth research report to learn more about why CRM doesn’t pass our bar.
Two Stocks to Watch:
Guidewire Software (GWRE)
Trailing 12-Month Free Cash Flow Margin: 21.9%
With its systems powering the operations of hundreds of insurance brands across 42 countries, Guidewire Software (NYSE: GWRE) provides a technology platform that helps property and casualty insurance companies manage their core operations, digital engagement, and analytics.
Why Are We Bullish on GWRE?
- Billings have averaged 21.1% growth over the last year, showing it’s securing new contracts that could potentially increase in value over time
- User-friendly software enables clients to ramp up spending quickly, leading to the speedy recovery of customer acquisition costs
- Free cash flow margin of 21.9% is higher than many in the industry, giving it breathing room and optionality
Guidewire Software is trading at $135.95 per share, or 7.6x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
GE Vernova (GEV)
Trailing 12-Month Free Cash Flow Margin: 19.1%
Born from the energy business of industrial giant General Electric in a 2023 spin-off, GE Vernova (NYSE: GEV) designs, manufactures, and services power generation equipment and grid technologies to help customers build more reliable and sustainable electric systems.
Why Should GEV Be on Your Watchlist?
- Projected revenue growth of 20.4% for the next 12 months is above its two-year trend, pointing to accelerating demand
- Earnings per share have massively outperformed its peers over the last one years, increasing by 223% annually
- Free cash flow margin grew by 41.9 percentage points over the last four years, giving the company more chips to play with
GE Vernova’s stock price of $1,034 implies a valuation ratio of 57.9x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
