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.
Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. That said, here are two cash-producing companies that excel at turning cash into shareholder value and one that may face some trouble.
One Stock to Sell:
DoubleVerify (DV)
Trailing 12-Month Free Cash Flow Margin: 19.2%
Using advanced analytics to evaluate over 17 billion digital ad transactions daily, DoubleVerify (NYSE: DV) provides AI-powered technology that verifies digital ads are viewable, fraud-free, brand-suitable, and displayed in the intended geographic location.
Why Does DV Give Us Pause?
- Estimated sales growth of 9.3% for the next 12 months implies demand will slow from its two-year trend
- Competitive market means the company must spend more on sales and marketing to stand out even if the return on investment is low
- Operating margin declined by 1.8 percentage points over the last year as it scaled
DoubleVerify is trading at $9.25 per share, or 2x forward price-to-sales. Read our free research report to see why you should think twice about including DV in your portfolio.
Two Stocks to Buy:
Insulet (PODD)
Trailing 12-Month Free Cash Flow Margin: 16.8%
Revolutionizing diabetes care with its tubeless "Pod" technology, Insulet (NASDAQ: PODD) develops and manufactures innovative insulin delivery systems for people with diabetes, primarily through its Omnipod product line.
Why Do We Love PODD?
- Average constant currency growth of 26% over the past two years demonstrates its ability to grow internationally despite currency fluctuations
- Free cash flow margin expanded by 32.6 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
- Returns on capital are climbing as management makes more lucrative bets
Insulet’s stock price of $241.94 implies a valuation ratio of 42.2x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
Paymentus (PAY)
Trailing 12-Month Free Cash Flow Margin: 9.6%
Founded in 2004 to simplify the complex world of bill payments, Paymentus (NYSE: PAY) provides a cloud-based platform that helps utilities, municipalities, and service providers automate billing and payment processes.
Why Will PAY Beat the Market?
- Market share has increased this cycle as its 39% annual revenue growth over the last two years was exceptional
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 86.3% outpaced its revenue gains
At $24.74 per share, Paymentus trades at 34.7x 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
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in 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.
