A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. Keeping that in mind, 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:
Baxter (BAX)
Trailing 12-Month Free Cash Flow Margin: 2.2%
With a history dating back to 1931 and products used in over 100 countries, Baxter International (NYSE: BAX) provides essential healthcare products including dialysis therapies, IV solutions, infusion systems, surgical products, and patient monitoring technologies to hospitals and clinics worldwide.
Why Should You Dump BAX?
- Constant currency growth was below our standards over the past two years, suggesting it might need to invest in product improvements to get back on track
- Performance over the past five years shows each sale was less profitable, as its earnings per share fell by 4.3% annually
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
At $18.78 per share, Baxter trades at 8.5x forward P/E. Dive into our free research report to see why there are better opportunities than BAX.
Two Stocks to Watch:
Coinbase (COIN)
Trailing 12-Month Free Cash Flow Margin: 4.2%
Widely regarded as the face of crypto, Coinbase (NASDAQ: COIN) is a blockchain infrastructure company updating the financial system with its trading, staking, stablecoin, and other payment solutions.
Why Is COIN a Good Business?
- Has the opportunity to boost monetization through new features and premium offerings as its monthly transacting users have grown by 11.7% annually over the last two years
- Switching costs of its platform were on full display over the last two years as it not only grew engagement but also increased the average revenue per user by 55% annually
- Earnings per share grew by 132% annually over the last two years, massively outpacing its peers
Coinbase’s stock price of $284.13 implies a valuation ratio of 25.7x forward EV/EBITDA. Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
Berkshire Hathaway (BRK.A)
Trailing 12-Month Free Cash Flow Margin: 6.9%
Led by legendary investor Warren Buffett since 1965, transforming it from a struggling textile manufacturer into a corporate giant, Berkshire Hathaway (NYSE: BRK.A) is a diversified holding company that owns businesses across insurance, railroads, utilities, manufacturing, retail, and services sectors.
Why Do We Watch BRK.A?
- Earnings growth has easily exceeded the peer group average over the last two years as its EPS has compounded at 18.9% annually
- Annual tangible book value per share growth of 15.9% over the past five years was outstanding, reflecting strong capital accumulation this cycle
- Stellar return on equity showcases management’s ability to surface highly profitable business ventures
Berkshire Hathaway is trading at $769,564 per share, or 22.8x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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 Tecnoglass (+1,754% 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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