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. That said, here is one cash-producing company that reinvests wisely to drive long-term success and two that may face some trouble.
Two Stocks to Sell:
Hasbro (HAS)
Trailing 12-Month Free Cash Flow Margin: 11.8%
Credited with the creation of toys such as Mr. Potato Head and the Rubik’s Cube, Hasbro (NASDAQ:HAS) is a global entertainment company offering a diverse range of toys, games, and multimedia experiences for children and families.
Why Do We Think HAS Will Underperform?
- Products and services have few die-hard fans as sales have declined by 3.1% annually over the last five years
- Historical operating margin losses point to an inefficient cost structure
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
At $75.07 per share, Hasbro trades at 16.4x forward P/E. Check out our free in-depth research report to learn more about why HAS doesn’t pass our bar.
MSCI (MSCI)
Trailing 12-Month Free Cash Flow Margin: 45.5%
Originally known as Morgan Stanley Capital International before becoming independent in 2007, MSCI (NYSE:MSCI) provides critical decision support tools, indexes, and analytics that help global investors understand risk and return factors and build more effective investment portfolios.
Why Do We Think Twice About MSCI?
- Negative return on equity shows that some of its growth strategies have backfired
MSCI is trading at $568.06 per share, or 31.6x forward P/E. Dive into our free research report to see why there are better opportunities than MSCI.
One Stock to Watch:
ResMed (RMD)
Trailing 12-Month Free Cash Flow Margin: 32.3%
Founded in 1989 to address the then-underdiagnosed condition of sleep apnea, ResMed (NYSE:RMD) develops cloud-connected medical devices and software solutions that treat sleep apnea, COPD, and other respiratory disorders for home and clinical use.
Why Does RMD Stand Out?
- Business is well-positioned no matter the global macroeconomic backdrop as its constant currency revenue growth averaged 10.3% over the past two years
- Incremental sales over the last five years have been highly profitable as its earnings per share increased by 14.9% annually, topping its revenue gains
- Free cash flow margin increased by 12.5 percentage points over the last five years, giving the company more capital to invest or return to shareholders
ResMed’s stock price of $274.41 implies a valuation ratio of 26.4x forward P/E. 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
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at 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 183% over the last five years (as of March 31st 2025).
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