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. That said, here are two cash-producing companies that reinvest wisely to drive long-term success and one that may face some trouble.
One Stock to Sell:
Wolverine Worldwide (WWW)
Trailing 12-Month Free Cash Flow Margin: 6.3%
Founded in 1883, Wolverine Worldwide (NYSE:WWW) is a global footwear company with a diverse portfolio of brands including Merrell, Hush Puppies, and Saucony.
Why Do We Steer Clear of WWW?
- Sales tumbled by 4.1% annually over the last five years, showing consumer trends are working against its favor
- Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
- Negative returns on capital show management lost money while trying to expand the business
Wolverine Worldwide’s stock price of $23.24 implies a valuation ratio of 21x forward P/E. Read our free research report to see why you should think twice about including WWW in your portfolio.
Two Stocks to Watch:
Workiva (WK)
Trailing 12-Month Free Cash Flow Margin: 7%
Founded in 2010, Workiva (NYSE:WK) offers software as a service product that makes financial and compliance reporting easier, especially for publicly traded corporations.
Why Could WK Be a Winner?
- Ability to secure long-term commitments with customers is evident in its 19.5% ARR growth over the last year
- Sales outlook for the upcoming 12 months implies the business will have more momentum than most peers
- Superior software functionality and low servicing costs result in a premier gross margin of 76.7%
Workiva is trading at $67.99 per share, or 4.2x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
Energy Recovery (ERII)
Trailing 12-Month Free Cash Flow Margin: 17.1%
Having saved far more than a trillion gallons of water, Energy Recovery (NASDAQ:ERII) provides energy recovery devices to the water treatment, oil and gas, and chemical processing sectors.
Why Is ERII a Top Pick?
- Annual revenue growth of 15.1% over the past two years was outstanding, reflecting market share gains this cycle
- Superior product capabilities and pricing power are reflected in its best-in-class gross margin of 69.4%
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 71.9% exceeded its revenue gains over the last two years
At $13.88 per share, Energy Recovery trades at 17x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 5 Growth Stocks for this month. 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.
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