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 reinvest wisely to drive long-term success and one that may face some trouble.
One Stock to Sell:
Verisk (VRSK)
Trailing 12-Month Free Cash Flow Margin: 36.8%
Processing over 2.8 billion insurance transaction records annually through one of the world's largest private databases, Verisk Analytics (NASDAQ: VRSK) provides data, analytics, and technology solutions that help insurance companies assess risk, detect fraud, and make better business decisions.
Why Does VRSK Give Us Pause?
- Sales trends were unexciting over the last five years as its 2% annual growth was below the typical business services company
- Earnings growth underperformed the sector average over the last five years as its EPS grew by just 7.2% annually
At $206 per share, Verisk trades at 27.8x forward P/E. To fully understand why you should be careful with VRSK, check out our full research report (it’s free for active Edge members).
Two Stocks to Buy:
Uber (UBER)
Trailing 12-Month Free Cash Flow Margin: 18%
Notoriously funded with $7.7 billion from the Softbank Vision Fund, Uber (NYSE: UBER) operates a platform of on-demand services such as ride-hailing, food delivery, and freight.
Why Are We Backing UBER?
- Monthly Active Platform Consumers are rising, meaning the company can increase revenue without incurring additional customer acquisition costs if it can cross-sell additional products and features
- Performance over the past three years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 151% outpaced its revenue gains
- Free cash flow margin increased by 15.4 percentage points over the last few years, giving the company more capital to invest or return to shareholders
Uber is trading at $95.65 per share, or 20.5x forward EV/EBITDA. Is now the right time to buy? See for yourself in our full research report, it’s free for active Edge members.
QuinStreet (QNST)
Trailing 12-Month Free Cash Flow Margin: 6.7%
Founded during the dot-com era in 1999 and specializing in high-intent consumer traffic, QuinStreet (NASDAQ: QNST) operates digital performance marketplaces that connect clients in financial and home services with consumers actively searching for their products.
Why Should You Buy QNST?
- Annual revenue growth of 37.2% over the past two years was outstanding, reflecting market share gains this cycle
- Forecasted revenue growth of 8.7% for the next 12 months indicates its momentum over the last two years is sustainable
- Earnings growth has trumped its peers over the last two years as its EPS has compounded at 160% annually
QuinStreet’s stock price of $13.95 implies a valuation ratio of 13.1x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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