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. Keeping that in mind, here are two cash-producing companies that reinvest wisely to drive long-term success and one that may struggle to keep up.
One Stock to Sell:
Ollie's (OLLI)
Trailing 12-Month Free Cash Flow Margin: 8%
Often located in suburban or semi-rural shopping centers, Ollie’s Bargain Outlet (NASDAQ: OLLI) is a discount retailer that acquires excess inventory then sells at meaningful discounts.
Why Is OLLI Not Exciting?
- Modest revenue base of $2.79 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- Operating margin was unchanged over the last year, suggesting it failed to gain leverage on its fixed costs
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
Ollie’s stock price of $76.07 implies a valuation ratio of 16.1x forward P/E. If you’re considering OLLI for your portfolio, see our FREE research report to learn more.
Two Stocks to Watch:
Micron (MU)
Trailing 12-Month Free Cash Flow Margin: 29%
Founded in the basement of a Boise, Idaho dental office in 1978, Micron (NASDAQ: MU) is a leading provider of memory chips used in thousands of devices across mobile, data centers, industrial, consumer, and automotive markets.
Why Are We Bullish on MU?
- Annual revenue growth of 106% over the last two years was superb and indicates its market share increased during this cycle
- Performance over the past five years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 57.1% outpaced its revenue gains
- Free cash flow margin jumped by 14.1 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
At $934.25 per share, Micron trades at 6.4x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
The Ensign Group (ENSG)
Trailing 12-Month Free Cash Flow Margin: 7.5%
Founded in 1999 and named after a naval term for a flag-bearing ship, The Ensign Group (NASDAQ: ENSG) operates skilled nursing facilities, senior living communities, and rehabilitation services across 15 states, primarily serving high-acuity patients recovering from various medical conditions.
Why Does ENSG Stand Out?
- Annual revenue growth of 19.1% over the past two years was outstanding, reflecting market share gains this cycle
- Revenue outlook for the upcoming 12 months is outstanding and shows it’s on track to gain market share
- Earnings growth has massively outpaced its peers over the last five years as its EPS has compounded at 13.9% annually
The Ensign Group is trading at $178.00 per share, or 21x forward P/E. Is now the right 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.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
