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:
Select Medical (SEM)
Trailing 12-Month Free Cash Flow Margin: 2.2%
With a nationwide network spanning 46 states and over 2,700 healthcare facilities, Select Medical (NYSE:SEM) operates critical illness recovery hospitals, rehabilitation hospitals, outpatient rehabilitation clinics, and occupational health centers across the United States.
Why Are We Wary of SEM?
- Declining admissions over the past two years imply it may need to invest in improvements to get back on track
- Sales over the last five years were less profitable as its earnings per share fell by 9.3% annually while its revenue was flat
- High net-debt-to-EBITDA ratio of 6× increases the risk of forced asset sales or dilutive financing if operational performance weakens
Select Medical’s stock price of $16.42 implies a valuation ratio of 13x forward P/E. Dive into our free research report to see why there are better opportunities than SEM.
Two Stocks to Watch:
Dynatrace (DT)
Trailing 12-Month Free Cash Flow Margin: 23.9%
With its platform processing over 30 trillion pieces of IT performance data daily, Dynatrace (NYSE:DT) provides an AI-powered platform that helps organizations monitor, secure, and optimize their applications and IT infrastructure across cloud environments.
Why Could DT Be a Winner?
- Billings growth has averaged 22.5% over the last year, indicating a healthy pipeline of new contracts that should drive future revenue increases
- Superior software functionality and low servicing costs are reflected in its premier gross margin of 81.7%
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Dynatrace is trading at $35.62 per share, or 4.9x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.
CBIZ (CBZ)
Trailing 12-Month Free Cash Flow Margin: 6.4%
With over 120 offices across 33 states and a team of more than 6,700 professionals, CBIZ (NYSE:CBZ) provides accounting, tax, benefits, insurance brokerage, and advisory services to help small and mid-sized businesses manage their finances and operations.
Why Do We Love CBZ?
- Annual revenue growth of 31.7% over the past two years was outstanding, reflecting market share gains this cycle
- Adjusted operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
- Earnings growth has trumped its peers over the last two years as its EPS has compounded at 21.4% annually
At $30.58 per share, CBIZ trades at 7.9x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
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 Exlservice (+354% five-year return). Find your next big winner with StockStory today.