A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
Not all companies are created equal, and StockStory is here to surface the ones with real upside. Keeping that in mind, 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:
A. O. Smith (AOS)
Trailing 12-Month Free Cash Flow Margin: 17%
Credited with the invention of the glass-lined water heater, A.O. Smith (NYSE: AOS) manufactures water heating and treatment products for various industries.
Why Are We Cautious About AOS?
- Sales were flat over the last two years, indicating it’s failed to expand this cycle
- Earnings per share have contracted by 1.6% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
- Waning returns on capital imply its previous profit engines are losing steam
At $60.44 per share, A. O. Smith trades at 15.1x forward P/E. To fully understand why you should be careful with AOS, check out our full research report (it’s free).
Two Stocks to Buy:
Rollins (ROL)
Trailing 12-Month Free Cash Flow Margin: 16.2%
Operating under multiple brands like Orkin and HomeTeam Pest Defense, Rollins (NYSE: ROL) provides pest and wildlife control services to residential and commercial customers.
Why Should You Buy ROL?
- Annual revenue growth of 11.7% over the past five years was outstanding, reflecting market share gains this cycle
- Superior product capabilities and pricing power are reflected in its best-in-class gross margin of 52.2%
- Robust free cash flow margin of 16.1% gives it many options for capital deployment, and its improved cash conversion implies it’s becoming a less capital-intensive business
Rollins is trading at $44.47 per share, or 35.4x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Euronet Worldwide (EEFT)
Trailing 12-Month Free Cash Flow Margin: 7%
Operating a global network of over 47,000 ATMs and 821,000 point-of-sale terminals across more than 60 countries, Euronet Worldwide (NASDAQ: EEFT) provides electronic payment solutions including ATM services, prepaid product processing, and international money transfer services.
Why Is EEFT a Top Pick?
- Annual revenue growth of 11.2% over the last five years beat the sector average and underscores the unique value of its offerings
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Industry-leading 20% return on equity demonstrates management’s skill in finding high-return investments
Euronet Worldwide’s stock price of $76.96 implies a valuation ratio of 6.9x 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
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
