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 is one cash-producing company that excels at turning cash into shareholder value and two that may face some trouble.
Two Stocks to Sell:
Monarch (MCRI)
Trailing 12-Month Free Cash Flow Margin: 26.3%
Established in 1993, Monarch (NASDAQ:MCRI) operates luxury casinos and resorts, offering high-end gaming, dining, and hospitality experiences.
Why Are We Out on MCRI?
- Annual revenue growth of 4.5% over the last two years was below our standards for the consumer discretionary sector
- Free cash flow margin is on track to jump by 1.2 percentage points next year, meaning the company will have more resources to pursue growth initiatives, repurchase shares, or pay dividends
- Rising returns on capital show management is making relatively better investments
Monarch’s stock price of $92.97 implies a valuation ratio of 16.4x forward P/E. Check out our free in-depth research report to learn more about why MCRI doesn’t pass our bar.
Autoliv (ALV)
Trailing 12-Month Free Cash Flow Margin: 5.4%
With products estimated to save over 30,000 lives annually in traffic accidents worldwide, Autoliv (NYSE:ALV) develops and manufactures passive safety systems for vehicles, including airbags, seatbelts, and steering wheels that protect occupants during crashes.
Why Are We Wary of ALV?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 2.7% for the last two years
- Estimated sales growth of 4.5% for the next 12 months is soft and implies weaker demand
- Gross margin of 17.9% is below its competitors, leaving less money to invest in areas like marketing and R&D
At $125.06 per share, Autoliv trades at 12.1x forward P/E. Read our free research report to see why you should think twice about including ALV in your portfolio.
One Stock to Buy:
The Trade Desk (TTD)
Trailing 12-Month Free Cash Flow Margin: 24.3%
Built as an alternative to "walled garden" advertising ecosystems, The Trade Desk (NASDAQ:TTD) provides a cloud-based platform that helps advertisers and agencies plan, manage, and optimize digital advertising campaigns across multiple channels and devices.
Why Is TTD a Top Pick?
- Winning new contracts that can potentially increase in value as its billings growth has averaged 20.1% over the last year
- User-friendly software enables clients to ramp up spending quickly, leading to the speedy recovery of customer acquisition costs
- Highly efficient business model is illustrated by its impressive 18.9% operating margin, and it turbocharged its profits by achieving some fixed cost leverage
The Trade Desk is trading at $37.28 per share, or 5.7x forward price-to-sales. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
Check out the high-quality names we’ve flagged in our Top 5 Strong Momentum Stocks for this week. 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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.