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.
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 struggle to keep up.
One Stock to Sell:
Udemy (UDMY)
Trailing 12-Month Free Cash Flow Margin: 8.1%
With courses ranging from investing to cooking to computer programming, Udemy (NASDAQ:UDMY) is an online learning platform that connects learners with expert instructors who specialize in a wide range of topics.
Why Are We Wary of UDMY?
- Focus on expanding its platform came at the expense of monetization as its average revenue per buyer fell by 1.7% annually
- Projected sales are flat for the next 12 months, implying demand will slow from its three-year trend
- High marketing expenses suggest it needs to spend heavily on new customer acquisition to sustain momentum
Udemy’s stock price of $5.08 implies a valuation ratio of 4.5x forward EV/EBITDA. Check out our free in-depth research report to learn more about why UDMY doesn’t pass our bar.
Two Stocks to Watch:
Snowflake (SNOW)
Trailing 12-Month Free Cash Flow Margin: 17.6%
Named after the unique architecture of its data warehouse which resembles a snowflake pattern, Snowflake (NYSE:SNOW) provides a cloud-based data platform that enables organizations to consolidate, analyze, and share data across multiple cloud providers.
Why Is SNOW a Top Pick?
- Billings growth has averaged 30.5% over the last year, indicating a healthy pipeline of new contracts that should drive future revenue increases
- Revenue outlook for the upcoming 12 months is outstanding and shows it’s on track to gain market share
- Free cash flow margin is forecasted to grow by 8.1 percentage points in the coming year, potentially giving the company more chips to play with
Snowflake is trading at $209.33 per share, or 13.1x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.
ATI (ATI)
Trailing 12-Month Free Cash Flow Margin: 9.7%
With its materials flying in nearly every commercial and military aircraft in service today, ATI (NYSE:ATI) produces highly specialized materials and components for aerospace, defense, medical, and energy applications using advanced metallurgy and manufacturing processes.
Why Could ATI Be a Winner?
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 19.8% exceeded its revenue gains over the last two years
- Free cash flow margin grew by 19.7 percentage points over the last five years, giving the company more chips to play with
- Rising returns on capital show the company is starting to reap the benefits of its past investments
At $123.59 per share, ATI trades at 33.9x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.