2 Cash-Producing Stocks on Our Watchlist and 1 We Turn Down

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 excel at turning cash into shareholder value and one best left off your watchlist.

One Stock to Sell:

Target (TGT)

Trailing 12-Month Free Cash Flow Margin: 2.8%

With a higher focus on style and aesthetics compared to other large general merchandise retailers, Target (NYSE:TGT) serves the suburban consumer who is looking for a wide range of products under one roof.

Why Does TGT Fall Short?

1. Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
2. Widely-available products (and therefore stiff competition) result in an inferior gross margin of 28.1% that must be offset through higher volumes
3. Incremental sales over the last six years were much less profitable as its earnings per share fell by 4.2% annually while its revenue grew

Target’s stock price of $96.28 implies a valuation ratio of 12.5x forward P/E. Check out our free in-depth research report to learn more about why TGT doesn’t pass our bar.

Two Stocks to Watch:

Upwork (UPWK)

Trailing 12-Month Free Cash Flow Margin: 29.6%

Formed through the 2013 merger of Elance and oDesk, Upwork (NASDAQ:UPWK) is an online platform where businesses and independent professionals connect to get work done.

Why Do We Like UPWK?

1. Customers are spending more money on its platform as its average revenue per customer has increased by 8.9% annually over the last two years
2. Performance over the past three years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 166% outpaced its revenue gains
3. Free cash flow margin expanded by 31.3 percentage points over the last few years, providing additional flexibility for investments and share buybacks/dividends

At $15.10 per share, Upwork trades at 10.4x forward EV/EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.

Medpace (MEDP)

Trailing 12-Month Free Cash Flow Margin: 26%

Founded in 1992 as a scientifically-driven alternative to traditional contract research organizations, Medpace (NASDAQ:MEDP) provides outsourced clinical trial management and research services to help pharmaceutical, biotechnology, and medical device companies develop new treatments.

Why Is MEDP Interesting?

1. Core business can prosper without any help from acquisitions as its organic revenue growth averaged 15.7% over the past two years
2. Share buybacks catapulted its annual earnings per share growth to 36.7%, which outperformed its revenue gains over the last five years
3. Stellar returns on capital showcase management’s ability to surface highly profitable business ventures

Medpace is trading at $469.40 per share, or 38.3x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.

Stocks We Like Even More

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our Top 5 Growth Stocks for this month. 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 Exlservice (+354% 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

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.