Cash-generating companies often have the flexibility to invest, return capital to shareholders, or navigate downturns. The best of these businesses not only accumulate cash but deploy it strategically for growth.
Identifying the most effective companies isn’t easy, and that’s why we started StockStory. Keeping that in mind, here are three cash-producing companies that reinvest wisely to drive long-term success.
Tetra Tech (TTEK)
Trailing 12-Month Free Cash Flow Margin: 15.2%
With a 50-year legacy of "Leading with Science" and operations on all seven continents, Tetra Tech (NASDAQ: TTEK) provides high-end consulting and engineering services focused on water management, environmental solutions, and sustainable infrastructure for government and commercial clients worldwide.
Why Do We Like TTEK?
- Market share has increased this cycle as its 13.3% annual revenue growth over the last five years was exceptional
- Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Free cash flow margin grew by 3.6 percentage points over the last five years, giving the company more chips to play with
Tetra Tech is trading at $28.03 per share, or 16.9x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
W. R. Berkley (WRB)
Trailing 12-Month Free Cash Flow Margin: 23.6%
Founded in 1967 and operating through more than 50 specialized insurance units across the globe, W. R. Berkley (NYSE: WRB) underwrites commercial insurance and reinsurance through specialized subsidiaries serving industries from healthcare to construction to transportation.
Why Should WRB Be on Your Watchlist?
- Strong 12.1% annualized net premiums earned expansion over the last five years shows it’s capturing market share this cycle
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 30.6% exceeded its revenue gains over the last five years
- Capital strength is on track to rise over the next 12 months as its 24.3% projected book value per share growth implies profitability will accelerate from its two-year trend
At $67.44 per share, W. R. Berkley trades at 2.4x forward P/B. Is now a good time to buy? Find out in our full research report, it’s free.
SM Energy (SM)
Trailing 12-Month Free Cash Flow Margin: 14.9%
Operating across three key regions with over 328,000 net acres under its control, SM Energy (NYSE: SM) explores for, develops, and produces oil, natural gas, and natural gas liquids primarily from shale formations in Texas and Utah.
Why Are We Backing SM?
- Annual revenue growth of 25.5% over the last five years was superb and indicates its market share increased during this cycle
- Highly-profitable operating model results in strong unit economics and a best-in-class gross margin of 87.2%
- EBITDA profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
SM Energy’s stock price of $27.41 implies a valuation ratio of 3.4x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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