While strong cash flow is a key indicator of stability, it doesn’t always translate to superior returns. Some cash-heavy businesses struggle with inefficient spending, slowing demand, or weak competitive positioning.
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 excel at turning cash into shareholder value and one that may struggle to keep up.
One Stock to Sell:
Charles River Laboratories (CRL)
Trailing 12-Month Free Cash Flow Margin: 14.4%
Named after the Massachusetts river where it was founded in 1947, Charles River Laboratories (NYSE: CRL) provides non-clinical drug development services, research models, and manufacturing support to pharmaceutical and biotechnology companies.
Why Are We Cautious About CRL?
- 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 be flat over the next 12 months and imply weak demand
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Charles River Laboratories’s stock price of $162 implies a valuation ratio of 16.2x forward P/E. Dive into our free research report to see why there are better opportunities than CRL.
Two Stocks to Watch:
Chipotle (CMG)
Trailing 12-Month Free Cash Flow Margin: 12.7%
Born from a desire to offer quick meals with fresh, flavorful ingredients, Chipotle (NYSE: CMG) is a fast-food chain known for its healthy, Mexican-inspired cuisine and customizable dishes.
Why Will CMG Beat the Market?
- Offensive push to build new restaurants and attack its untapped market opportunities is backed by its same-store sales growth
- Average same-store sales growth of 4.8% over the past two years indicates its restaurants are resonating with diners
- Dominant market position is represented by its $11.58 billion in revenue and gives it fixed cost leverage when sales grow
Chipotle is trading at $39.64 per share, or 30.2x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
PayPal (PYPL)
Trailing 12-Month Free Cash Flow Margin: 17.6%
Originally spun off from eBay in 2015 after being acquired by the auction giant in 2002, PayPal (NASDAQ: PYPL) operates a global digital payments platform that enables consumers and merchants to send, receive, and process payments online and in person.
Why Does PYPL Stand Out?
- 10.9% annual revenue growth over the last five years was better than the sector average, highlighting the value of its products and services
- Share repurchases have increased shareholder returns as its annual earnings per share growth of 12.6% exceeded its revenue gains over the last two years
- ROE punches in at 20%, illustrating management’s expertise in identifying profitable investments
At $68.45 per share, PayPal trades at 13.1x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 6 Stocks for this week. 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 Kadant (+351% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
