A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
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 leverages its financial strength to beat its competitors and two best left off your watchlist.
Two Stocks to Sell:
Kulicke and Soffa (KLIC)
Trailing 12-Month Free Cash Flow Margin: 20.3%
Headquartered in Singapore, Kulicke & Soffa (NASDAQ: KLIC) is a provider of production equipment and tools used to assemble semiconductor devices
Why Do We Avoid KLIC?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 17.2% annually over the last two years
- Sales are projected to tank by 8.8% over the next 12 months as its demand continues evaporating
- Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 16.4 percentage points
Kulicke and Soffa’s stock price of $35.90 implies a valuation ratio of 21.2x forward P/E. Read our free research report to see why you should think twice about including KLIC in your portfolio.
Lindsay (LNN)
Trailing 12-Month Free Cash Flow Margin: 13%
A pioneer in the field of center pivot and lateral move irrigation, Lindsay (NYSE: LNN) provides a variety of proprietary water management and road infrastructure products and services.
Why Does LNN Fall Short?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Sales are projected to tank by 2.6% over the next 12 months as its demand continues evaporating
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 4% annually
At $138.64 per share, Lindsay trades at 21.7x forward P/E. Dive into our free research report to see why there are better opportunities than LNN.
One Stock to Watch:
BioMarin Pharmaceutical (BMRN)
Trailing 12-Month Free Cash Flow Margin: 21.2%
Pioneering treatments for conditions that often had no previous therapeutic options, BioMarin Pharmaceutical (NASDAQ: BMRN) develops and commercializes therapies that address the root causes of rare genetic disorders, particularly those affecting children.
Why Could BMRN Be a Winner?
- Impressive 16.5% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Incremental sales over the last five years have been highly profitable as its earnings per share increased by 22.8% annually, topping its revenue gains
- Free cash flow margin expanded by 14.9 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
BioMarin Pharmaceutical is trading at $58.35 per share, or 13.1x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
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