2 Cash-Producing Stocks with Competitive Advantages and 1 We Turn Down
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.
Luckily for you, we built StockStory to help you separate the good from the bad. 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:
FormFactor (FORM)
Trailing 12-Month Free Cash Flow Margin: 15.1%
With customers across the foundry and fabless markets, FormFactor (NASDAQ:FORM) is a US-based provider of test and measurement technologies for semiconductors.
Why Are We Hesitant About FORM?
- Sales trends were unexciting over the last five years as its 3.8% annual growth was below the typical semiconductor company
- Gross margin of 42.8% is below its competitors, leaving less money to invest in areas like marketing and R&D
- Poor free cash flow margin of 8.4% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
At $106.55 per share, FormFactor trades at 33.3x forward P/E. Dive into our free research report to see why there are better opportunities than FORM.
Two Stocks to Watch:
Astrana Health (ASTH)
Trailing 12-Month Free Cash Flow Margin: 2.5%
Formerly known as Apollo Medical Holdings until early 2024, Astrana Health (NASDAQ:ASTH) operates a technology-powered healthcare platform that enables physicians to deliver coordinated care while successfully participating in value-based payment models.
Why Do We Like ASTH?
- Impressive 55.4% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Sales outlook for the upcoming 12 months implies the business will stay on its desirable two-year growth trajectory
- Earnings growth has comfortably beaten the peer group average over the last five years as its EPS has compounded at 11.6% annually
Astrana Health’s stock price of $39.60 implies a valuation ratio of 8.7x forward EV-to-EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.
CNX Resources (CNX)
Trailing 12-Month Free Cash Flow Margin: 27.8%
Tracing back to operations that began in 1860, CNX Resources (NYSE:CNX) drills for and produces natural gas from underground shale formations in Pennsylvania, Ohio, and West Virginia.
What Makes CNX Stand Out?
- Attractive asset base leads to wonderful unit economics and a top-tier gross margin of 68%
- EBITDA margin was unchanged over the last five years, suggesting it failed to gain leverage on its fixed costs
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
CNX Resources is trading at $35.42 per share, or 11.2x 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
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.