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. That said, here is one cash-producing company that reinvests wisely to drive long-term success and two that may struggle to keep up.
Two Stocks to Sell:
PepsiCo (PEP)
Trailing 12-Month Free Cash Flow Margin: 9.7%
With a history that goes back more than a century, PepsiCo (NASDAQ: PEP) is a household name in food and beverages today and best known for its flagship soda.
Why Are We Hesitant About PEP?
- Shrinking unit sales over the past two years indicate demand is soft and that the company may need to revise its product strategy
- Anticipated sales growth of 4.3% for the next year implies demand will be shaky
- Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 1.2 percentage points
PepsiCo’s stock price of $157.03 implies a valuation ratio of 18x forward P/E. If you’re considering PEP for your portfolio, see our FREE research report to learn more.
MSA Safety (MSA)
Trailing 12-Month Free Cash Flow Margin: 15.8%
Founded in 1914 as Mine Safety Appliances to protect coal miners from dangerous gases, MSA Safety (NYSE: MSA) designs and manufactures advanced safety products that protect workers and facilities across industries including fire service, energy, construction, and manufacturing.
Why Is MSA Not Exciting?
- 2.4% annual revenue growth over the last two years was slower than its business services peers
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 6.2% annually
MSA Safety is trading at $173.48 per share, or 19.9x forward P/E. To fully understand why you should be careful with MSA, check out our full research report (it’s free).
One Stock to Buy:
Vita Coco (COCO)
Trailing 12-Month Free Cash Flow Margin: 6.4%
Founded in 2004 followed by a 2021 IPO, The Vita Coco Company (NASDAQ: COCO) offers coconut water products that are a natural way to quench thirst.
Why Are We Bullish on COCO?
- Stellar 9.9% growth in unit sales over the past two years demonstrates the high demand for its products
- Earnings growth has trumped its peers over the last three years as its EPS has compounded at 70.9% annually
- Industry-leading 36.9% return on capital demonstrates management’s skill in finding high-return investments, and its rising returns show it’s making even more lucrative bets
At $47.25 per share, Vita Coco trades at 30x 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
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don't just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
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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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
