1 Cash-Producing Stock to Research Further and 2 We Turn Down

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. That said, here is one cash-producing company that excels at turning cash into shareholder value and two that may struggle to keep up.

Two Stocks to Sell:

GEO Group (GEO)

Trailing 12-Month Free Cash Flow Margin: 5.3%

With a global footprint spanning three continents and approximately 81,000 beds across 100 facilities, GEO Group (NYSE:GEO) operates secure facilities, processing centers, and reentry services for government agencies in the United States, Australia, and South Africa.

Why Do We Steer Clear of GEO?

1. Sales stagnated over the last five years and signal the need for new growth strategies
2. Earnings per share fell by 12% annually over the last five years while its revenue was flat, showing each sale was less profitable
3. Free cash flow margin dropped by 7.3 percentage points over the last five years, implying the company became more capital intensive as competition picked up

GEO Group is trading at $20.92 per share, or 11.2x forward P/E. If you’re considering GEO for your portfolio, see our FREE research report to learn more.

XPO (XPO)

Trailing 12-Month Free Cash Flow Margin: 2.8%

Owning a mobile game simulating freight operations for the Tour de France, XPO (NYSE:XPO) is a transportation company specializing in expedited shipping services.

Why Is XPO Risky?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 6.5% annually over the last five years
2. Flat earnings per share over the last two years lagged its peers
3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 6 percentage points

At $129.15 per share, XPO trades at 31.8x forward P/E. Read our free research report to see why you should think twice about including XPO in your portfolio.

One Stock to Watch:

Cigna (CI)

Trailing 12-Month Free Cash Flow Margin: 1.5%

With roots dating back to 1792 and serving millions of customers across the globe, The Cigna Group (NYSE:CI) provides healthcare services through its Evernorth Health Services and Cigna Healthcare segments, offering pharmacy benefits, specialty care, and medical plans.

Why Do We Like CI?

1. Market share has increased this cycle as its 18.7% annual revenue growth over the last two years was exceptional
2. Massive revenue base of $262 billion gives it meaningful leverage when negotiating reimbursement rates
3. Earnings per share have outperformed the peer group average over the last five years, increasing by 7.7% annually

Cigna’s stock price of $285.19 implies a valuation ratio of 8.9x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

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