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 leverage their financial strength to beat the competition.
Pinterest (PINS)
Trailing 12-Month Free Cash Flow Margin: 28.1%
Created with the idea of virtually replacing paper catalogues, Pinterest (NYSE: PINS) is an online image and social discovery platform.
Why Will PINS Outperform?
- Monthly Active Users have increased by an average of 11% annually, giving it the potential for margin-accretive growth if it can develop valuable complementary products and features
- Performance over the past three years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 36.4% outpaced its revenue gains
- PINS is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its recently improved profitability means it has even more resources to invest or distribute
Pinterest’s stock price of $18.40 implies a valuation ratio of 13.7x forward EV/EBITDA. Is now a good time to buy? See for yourself in our full research report, it’s free.
MACOM (MTSI)
Trailing 12-Month Free Cash Flow Margin: 17.5%
Founded in the 1950s as Microwave Associates, a communications supplier to the US Army Signal Corp, today MACOM Technology Solutions (NASDAQ: MTSI) is a provider of analog chips used in optical, wireless, and satellite networks.
Why Does MTSI Stand Out?
- Market share has increased this cycle as its 30.9% annual revenue growth over the last two years was exceptional
- Demand will likely accelerate over the next 12 months as its forecasted revenue growth of 50% is above its two-year trend
- Earnings growth has easily exceeded the peer group average over the last five years as its EPS has compounded at 18.1% annually
MACOM is trading at $277.75 per share, or 34.7x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
APi (APG)
Trailing 12-Month Free Cash Flow Margin: 8%
Started in 1926 as an insulation contractor, APi (NYSE: APG) provides life safety solutions and specialty services for buildings and infrastructure.
Why Is APG a Good Business?
- Annual revenue growth of 18.5% over the past five years was outstanding, reflecting market share gains this cycle
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 17.5% outpaced its revenue gains
- Free cash flow margin grew by 7.2 percentage points over the last five years, giving the company more chips to play with
At $38.36 per share, APi trades at 20.9x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
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