Cash-generating companies often have the flexibility to invest, return capital to shareholders, or navigate downturns. The best of these businesses not only accumulate cash but deploy it strategically for growth.
Identifying the most effective companies isn’t easy, and that’s why we started StockStory. Keeping that in mind, here are three cash-producing companies that excel at turning cash into shareholder value.
Core & Main (CNM)
Trailing 12-Month Free Cash Flow Margin: 8.2%
Formerly a division of industrial distributor HD Supply, Core & Main (NYSE:CNM) is a provider of water, wastewater, and fire protection products and services.
Why Are We Positive on CNM?
- Impressive 12.9% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Share repurchases over the last two years enabled its annual earnings per share growth of 15.8% to outpace its revenue gains
- Free cash flow margin increased by 8.5 percentage points over the last five years, giving the company more capital to invest or return to shareholders
Core & Main is trading at $41.84 per share, or 13x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Applied Industrial (AIT)
Trailing 12-Month Free Cash Flow Margin: 9.3%
Formerly called The Ohio Ball Bearing Company, Applied Industrial (NYSE:AIT) distributes industrial products–everything from power tools to industrial valves–and services to a wide variety of industries.
Why Do We Watch AIT?
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Free cash flow margin grew by 4.8 percentage points over the last five years, giving the company more chips to play with
- Industry-leading 20% return on capital demonstrates management’s skill in finding high-return investments
At $345.98 per share, Applied Industrial trades at 28.5x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Blue Bird (BLBD)
Trailing 12-Month Free Cash Flow Margin: 9.5%
With around a century of experience, Blue Bird (NASDAQ:BLBD) is a manufacturer of school buses and complementary parts.
Why Are We Bullish on BLBD?
- Products are reaching more customers as its unit sales averaged 9.2% growth over the past two years
- Free cash flow margin grew by 23.3 percentage points over the last five years, giving the company more chips to play with
- Returns on capital are climbing as management makes more lucrative bets
Blue Bird’s stock price of $57.03 implies a valuation ratio of 12.9x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
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