2 Cash-Producing Stocks with Exciting Potential and 1 Facing Headwinds

While strong cash flow is a key indicator of stability, it doesn’t always translate to superior returns. Some cash-heavy businesses struggle with inefficient spending, slowing demand, or weak competitive positioning.

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:

Etsy (ETSY)

Trailing 12-Month Free Cash Flow Margin: 22.2%

Founded by a struggling amateur furniture maker Robert Kalin and his two friends, Etsy (NYSE:ETSY) is one of the world’s largest online marketplaces, focusing on handmade or vintage items.

Why Are We Hesitant About ETSY?

1. Active Buyers have declined by 1.4% annually over the last two years, suggesting it may need to revamp its features or user experience to stay competitive
2. Forecasted revenue decline of 3.4% for the upcoming 12 months implies demand will fall off a cliff
3. Annual earnings per share growth of 1.4% underperformed its revenue over the last three years, showing its incremental sales were less profitable

Etsy’s stock price of $48.83 implies a valuation ratio of 8.9x forward EV/EBITDA. Dive into our free research report to see why there are better opportunities than ETSY.

Two Stocks to Watch:

Snap (SNAP)

Trailing 12-Month Free Cash Flow Margin: 7.4%

Founded by Stanford University students Evan Spiegel, Reggie Brown, and Bobby Murphy, and originally called Picaboo, Snapchat (NYSE: SNAP) is an image centric social media network.

Why Could SNAP Be a Winner?

1. Disciplined cost controls and effective management resulted in a strong two-year EBITDA margin of 10.6%, and its operating leverage amplified its profits over the last few years
2. Incremental sales over the last three years have been highly profitable as its earnings per share increased by 27.9% annually, topping its revenue gains
3. Free cash flow margin increased by 6.2 percentage points over the last few years, giving the company more capital to invest or return to shareholders

At $5.00 per share, Snap trades at 9.2x forward EV/EBITDA. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.

Universal Display (OLED)

Trailing 12-Month Free Cash Flow Margin: 23.7%

Serving major consumer electronics manufacturers, Universal Display (NASDAQ:OLED) is a provider of organic light emitting diode (OLED) technologies used in display and lighting applications.

Why Are We Positive On OLED?

1. Offerings are mission-critical for businesses and lead to a best-in-class gross margin of 75.3%
2. Healthy operating margin of 37.5% shows it’s a well-run company with efficient processes
3. Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends

Universal Display is trading at $117.73 per share, or 21.5x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.

Stocks We Like Even More

If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.

Don’t wait for the next volatility shock. Check 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 244% over the last five years (as of June 30, 2025).

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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.