1 Cash-Producing Stock Worth Your Attention and 2 We Question

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

Not all companies are created equal, and StockStory is here to surface the ones with real upside. That said, here is one cash-producing company that reinvests wisely to drive long-term success and two best left off your watchlist.

Two Stocks to Sell:

Carrier Global (CARR)

Trailing 12-Month Free Cash Flow Margin: 5.1%

Founded by the inventor of air conditioning, Carrier Global (NYSE:CARR) manufactures heating, ventilation, air conditioning, and refrigeration products.

Why Is CARR Risky?

1. Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
2. Demand is forecasted to shrink as its estimated sales for the next 12 months are flat
3. Diminishing returns on capital suggest its earlier profit pools are drying up

Carrier Global’s stock price of $59.49 implies a valuation ratio of 22.4x forward P/E. If you’re considering CARR for your portfolio, see our FREE research report to learn more.

Merit Medical Systems (MMSI)

Trailing 12-Month Free Cash Flow Margin: 14%

Founded in 1987 and now offering over 1,700 patented products across global markets, Merit Medical Systems (NASDAQ:MMSI) manufactures and markets specialized medical devices used in minimally invasive procedures for cardiology, radiology, oncology, critical care, and endoscopy.

Why Are We Wary of MMSI?

1. Smaller revenue base of $1.48 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
2. ROIC of 4.9% reflects management’s challenges in identifying attractive investment opportunities

Merit Medical Systems is trading at $81.12 per share, or 20.4x forward P/E. To fully understand why you should be careful with MMSI, check out our full research report (it’s free).

One Stock to Watch:

Cardinal Health (CAH)

Trailing 12-Month Free Cash Flow Margin: 1.9%

Operating as a critical link in the healthcare supply chain since 1979, Cardinal Health (NYSE:CAH) distributes pharmaceuticals and manufactures medical products for hospitals, pharmacies, and healthcare providers across the global healthcare supply chain.

Why Could CAH Be a Winner?

1. Massive revenue base of $234.3 billion in a highly regulated sector makes the company difficult to replace, giving it meaningful negotiating power
2. Projected revenue growth of 12.8% for the next 12 months indicates demand will rise above its two-year trend
3. Earnings growth has easily exceeded the peer group average over the last five years as its EPS has compounded at 9.4% annually

At $214.99 per share, Cardinal Health trades at 20.6x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.

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