2 Cash-Producing Stocks to Keep an Eye On and 1 That Underwhelm

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 reinvest wisely to drive long-term success and one that may struggle to keep up.

One Stock to Sell:

Coty (COTY)

Trailing 12-Month Free Cash Flow Margin: 6.7%

With a portfolio boasting many household brands, Coty (NYSE:COTY) is a beauty products powerhouse spanning cosmetics, fragrances, and skincare.

Why Do We Steer Clear of COTY?

1. Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
2. Efficiency has decreased over the last year as its operating margin fell by 9 percentage points
3. Earnings per share have dipped by 14.3% annually over the past three years, which is concerning because stock prices follow EPS over the long term

Coty is trading at $2.65 per share, or 8.2x forward P/E. Read our free research report to see why you should think twice about including COTY in your portfolio.

Two Stocks to Watch:

Sprouts (SFM)

Trailing 12-Month Free Cash Flow Margin: 5.3%

Playing on the secular trend of healthier living, Sprouts Farmers Market (NASDAQ:SFM) is a grocery store chain emphasizing natural and organic products.

Why Does SFM Stand Out?

1. Fast expansion of new stores to reach markets with few or no locations is justified by its same-store sales growth
2. Same-store sales growth averaged 7.5% over the past two years, showing it’s bringing new and repeat shoppers into its stores
3. Sales outlook for the upcoming 12 months implies the business will stay on its desirable three-year growth trajectory

Sprouts’s stock price of $75.40 implies a valuation ratio of 13.3x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.

United Therapeutics (UTHR)

Trailing 12-Month Free Cash Flow Margin: 35.9%

Founded by a mother seeking treatment for her daughter's pulmonary arterial hypertension, United Therapeutics (NASDAQ:UTHR) develops and commercializes medications for chronic lung diseases and other life-threatening conditions, with a focus on pulmonary hypertension treatments.

Why Are We Backing UTHR?

1. Market share has increased this cycle as its 16.9% annual revenue growth over the last two years was exceptional
2. Robust free cash flow margin of 34.2% gives it many options for capital deployment, and its recently improved profitability means it has even more resources to invest or distribute
3. Returns on capital are growing as management capitalizes on its market opportunities

At $503.63 per share, United Therapeutics trades at 19.6x forward P/E. Is now the time to initiate a position? See for yourself 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 9 Market-Beating Stocks. 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 Exlservice (+354% five-year return). Find your next big winner with StockStory today.