Generating cash is essential for any business, but not all cash-rich companies are great investments. Some produce plenty of cash but fail to allocate it effectively, leading to missed opportunities.
Not all companies are created equal, and StockStory is here to surface the ones with real upside. 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:
Elanco (ELAN)
Trailing 12-Month Free Cash Flow Margin: 7.5%
Originally established as a division of pharmaceutical giant Eli Lilly before becoming independent in 2018, Elanco Animal Health (NYSE:ELAN) develops and sells medications, vaccines, and other health products for pets and farm animals across more than 90 countries.
Why Does ELAN Fall Short?
- Muted 2% annual revenue growth over the last five years shows its demand lagged behind its healthcare peers
- Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 3.5 percentage points
- Negative returns on capital show management lost money while trying to expand the business
Elanco’s stock price of $22.73 implies a valuation ratio of 18.4x forward P/E. Dive into our free research report to see why there are better opportunities than ELAN.
Two Stocks to Buy:
Mastercard (MA)
Trailing 12-Month Free Cash Flow Margin: 45.5%
Recognizable by its iconic "Priceless" advertising campaign that has run in over 120 countries, Mastercard (NYSE:MA) operates a global payments network that connects consumers, financial institutions, merchants, and businesses, enabling electronic transactions and providing payment solutions.
What Makes MA Stand Out?
- Annual revenue growth of 16.1% over the last five years was superb and indicates its market share increased during this cycle
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Stellar return on equity showcases management’s ability to surface highly profitable business ventures
At $565.68 per share, Mastercard trades at 26x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
Euronet Worldwide (EEFT)
Trailing 12-Month Free Cash Flow Margin: 6.1%
Operating a global network of over 47,000 ATMs and 821,000 point-of-sale terminals across more than 60 countries, Euronet Worldwide (NASDAQ:EEFT) provides electronic payment solutions including ATM services, prepaid product processing, and international money transfer services.
Why Are We Bullish on EEFT?
- Products and services resonate with customers, evidenced by its respectable 9.8% annualized sales growth over the last five years
- Share buybacks catapulted its annual earnings per share growth to 28.3%, which outperformed its revenue gains over the last five years
- Industry-leading 21.1% return on equity demonstrates management’s skill in finding high-return investments
Euronet Worldwide is trading at $64.83 per share, or 5.7x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.