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. That said, here are two cash-producing companies that excel at turning cash into shareholder value and one that may struggle to keep up.
One Stock to Sell:
Yelp (YELP)
Trailing 12-Month Free Cash Flow Margin: 22.1%
Founded by PayPal alumni Jeremy Stoppelman and Russel Simmons, Yelp (NYSE: YELP) is an online platform that helps people discover local businesses through crowd-sourced reviews.
Why Are We Wary of YELP?
- Annual revenue growth of 7.1% over the last three years was below our standards for the consumer internet sector
- Demand is forecasted to shrink as its estimated sales for the next 12 months are flat
Yelp’s stock price of $24.26 implies a valuation ratio of 3.9x forward EV/EBITDA. Dive into our free research report to see why there are better opportunities than YELP.
Two Stocks to Watch:
Commvault (CVLT)
Trailing 12-Month Free Cash Flow Margin: 15.8%
Born from the need to create ironclad protection in an increasingly dangerous digital world, Commvault (NASDAQ: CVLT) provides data protection and cyber resilience software that helps organizations secure, back up, and recover their data across on-premises, hybrid, and multi-cloud environments.
Why Could CVLT Be a Winner?
- Billings growth has averaged 26.6% over the last year, indicating a healthy pipeline of new contracts that should drive future revenue increases
- Software is difficult to replicate at scale and leads to a stellar gross margin of 81.4%
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
At $76.08 per share, Commvault trades at 2.8x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
WisdomTree (WT)
Trailing 12-Month Free Cash Flow Margin: 30%
Originally founded as a financial media company before pivoting to ETF management in 2006, WisdomTree (NYSE: WT) is a financial services company that creates and manages exchange-traded funds (ETFs) and other investment products for individual and institutional investors.
Why Do We Love WT?
- Impressive 18.9% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Share repurchases over the last two years enabled its annual earnings per share growth of 52.5% to outpace its revenue gains
- ROE punches in at 17%, illustrating management’s expertise in identifying profitable investments
WisdomTree is trading at $13.61 per share, or 13x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum — both boxes checked at the same time.
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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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
