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

Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. Keeping that in mind, here are two cash-producing companies that leverage their financial strength to beat the competition and one that may struggle to keep up.

One Stock to Sell:

Danaher (DHR)

Trailing 12-Month Free Cash Flow Margin: 20.2%

Born from a real estate investment trust that transformed into a manufacturing powerhouse, Danaher (NYSE: DHR) is a global science and technology company that provides specialized equipment, software, and services for biotechnology, life sciences, and diagnostics.

Why Does DHR Give Us Pause?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 2.9% annually over the last two years
2. 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
3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 5.5 percentage points

Danaher is trading at $210.09 per share, or 25.7x forward P/E. To fully understand why you should be careful with DHR, check out our full research report (it’s free for active Edge members).

Two Stocks to Watch:

Rollins (ROL)

Trailing 12-Month Free Cash Flow Margin: 17.7%

Operating under multiple brands like Orkin and HomeTeam Pest Defense, Rollins (NYSE: ROL) provides pest and wildlife control services to residential and commercial customers.

Why Will ROL Beat the Market?

1. Annual revenue growth of 11.5% over the last two years was superb and indicates its market share increased during this cycle
2. Offerings are mission-critical for businesses and lead to a best-in-class gross margin of 52.2%
3. Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends

Rollins’s stock price of $57.98 implies a valuation ratio of 49.2x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.

Abbott Laboratories (ABT)

Trailing 12-Month Free Cash Flow Margin: 15.7%

With roots dating back to 1888 when founder Dr. Wallace Abbott began producing precise, dosage-form medications, Abbott Laboratories (NYSE: ABT) develops and sells a diverse range of healthcare products including medical devices, diagnostics, nutrition products, and branded generic pharmaceuticals.

Why Are We Positive On ABT?

1. Scale advantages are evident in its $43.11 billion revenue base, which provides operating leverage when demand is strong
2. Share repurchases have increased shareholder returns as its annual earnings per share growth of 10.2% exceeded its revenue gains over the last five years
3. ABT is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders

At $133.30 per share, Abbott Laboratories trades at 24.6x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .

Stocks We Like Even More

Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 6 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).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.