2 Cash-Producing Stocks to Own for Decades and 1 We Find Risky

A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.

Luckily for you, we built StockStory to help you separate the good from the bad. Keeping that in mind, 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:

Hillenbrand (HI)

Trailing 12-Month Free Cash Flow Margin: 3.9%

Hillenbrand, Inc. (NYSE: HI) is an industrial company that designs, manufactures, and sells highly engineered processing equipment and solutions for various industries.

Why Do We Steer Clear of HI?

1. Annual revenue growth of 3.5% over the last two years was below our standards for the industrials sector
2. 18.9 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
3. Diminishing returns on capital suggest its earlier profit pools are drying up

Hillenbrand is trading at $24.06 per share, or 10x forward P/E. If you’re considering HI for your portfolio, see our FREE research report to learn more.

Two Stocks to Buy:

Nova (NVMI)

Trailing 12-Month Free Cash Flow Margin: 25.5%

Headquartered in Israel, Nova (NASDAQ:NVMI) is a provider of quality control systems used in semiconductor manufacturing.

Why Are We Backing NVMI?

1. Market share has increased this cycle as its 21.1% annual revenue growth over the last two years was exceptional
2. Earnings per share grew by 34.1% annually over the last five years and trumped its peers
3. NVMI is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders

At $307 per share, Nova trades at 35.4x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.

Lululemon (LULU)

Trailing 12-Month Free Cash Flow Margin: 10.7%

Originally serving yogis and hockey players, Lululemon (NASDAQ:LULU) is a designer, distributor, and retailer of athletic apparel for men and women.

Why Do We Love LULU?

1. Locations open for at least a year are seeing increased demand as same-store sales have averaged 5.3% growth over the past two years
2. Collection of products is difficult to replicate at scale and leads to a best-in-class gross margin of 58.8%
3. Robust free cash flow margin of 13.7% gives it many options for capital deployment

Lululemon’s stock price of $179.40 implies a valuation ratio of 12.3x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

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 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).

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