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.
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 leverage their financial strength to beat the competition and one best left off your watchlist.
One Stock to Sell:
Starbucks (SBUX)
Trailing 12-Month Free Cash Flow Margin: 6.2%
Started by three friends in Seattle’s historic Pike Place Market, Starbucks (NASDAQ: SBUX) is a globally-renowned coffeehouse chain that offers a wide selection of high-quality coffee, beverages, and food items.
Why Do We Think SBUX Will Underperform?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its menu offerings and dining experience
- Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 6.8 percentage points
- Incremental sales over the last six years were much less profitable as its earnings per share fell by 5.9% annually while its revenue grew
Starbucks is trading at $96.62 per share, or 38.2x forward P/E. If you’re considering SBUX for your portfolio, see our FREE research report to learn more.
Two Stocks to Buy:
Zeta Global (ZETA)
Trailing 12-Month Free Cash Flow Margin: 12.6%
Powered by an AI engine that processes over one trillion consumer signals monthly, Zeta Global (NYSE: ZETA) operates a data-driven cloud platform that helps companies target, connect, and engage with consumers through personalized marketing across channels like email, social media, and video.
Why Is ZETA a Top Pick?
- Billings growth has averaged 31.5% over the last year, indicating a healthy pipeline of new contracts that should drive future revenue increases
- Expected revenue growth of 34.7% for the next year suggests its market share will rise
- Well-designed software integrates seamlessly with other workflows, enabling swift payback periods on marketing expenses and customer growth at scale
Zeta Global’s stock price of $15.68 implies a valuation ratio of 2.1x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.
ITT (ITT)
Trailing 12-Month Free Cash Flow Margin: 14.1%
Playing a crucial role in the development of the first transatlantic television transmission in 1956, ITT (NYSE: ITT) provides motion and fluid handling equipment for various industries
Why Should You Buy ITT?
- 9.7% annual revenue growth over the last five years surpassed the sector average as its offerings resonated with customers
- Projected revenue growth of 35% for the next 12 months is above its two-year trend, pointing to accelerating demand
- Free cash flow margin increased by 17.6 percentage points over the last five years, giving the company more capital to invest or return to shareholders
At $210.15 per share, ITT trades at 25.7x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
