A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
Luckily for you, we built StockStory to help you separate the good from the bad. Keeping that in mind, here is one cash-producing company that leverages its financial strength to beat its competitors and two that may face some trouble.
Two Stocks to Sell:
Herc (HRI)
Trailing 12-Month Free Cash Flow Margin: 7.4%
Formerly a subsidiary of Hertz Corporation and with a logo that still bears some similarities to its former parent, Herc Holdings (NYSE: HRI) provides equipment rental and related services to a wide range of industries.
Why Does HRI Worry Us?
- Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 7.2 percentage points
- Revenue growth over the past two years was nullified by the company’s new share issuances as its earnings per share fell by 28% annually
- Waning returns on capital imply its previous profit engines are losing steam
At $142.42 per share, Herc trades at 21.7x forward P/E. Read our free research report to see why you should think twice about including HRI in your portfolio.
Scorpio Tankers (STNG)
Trailing 12-Month Free Cash Flow Margin: 46.4%
Operating one of the youngest fleets in the industry, Scorpio Tankers (NYSE: STNG) is an international provider of marine transportation services, specializing in the shipment of refined petroleum.
Why Does STNG Fall Short?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 13.6% annually over the last two years
- Number of total vessels has disappointed over the past two years, indicating weak demand for its offerings
- Earnings per share have contracted by 17% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
Scorpio Tankers’s stock price of $75.74 implies a valuation ratio of 6.7x forward P/E. Dive into our free research report to see why there are better opportunities than STNG.
One Stock to Watch:
Occidental Petroleum (OXY)
Trailing 12-Month Free Cash Flow Margin: 15.7%
Backed by Warren Buffett's Berkshire Hathaway as a major shareholder, Occidental Petroleum (NYSE: OXY) explores for, develops, and produces oil, natural gas liquids, and natural gas, primarily in the United States and Middle East.
Why Are We Positive on OXY?
- Annual revenue growth of 6.1% over the past ten years was outstanding, reflecting market share gains this cycle
- Enormous revenue base of $21.45 billion provides significant leverage in supplier negotiations
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Occidental Petroleum is trading at $55.44 per share, or 9.7x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
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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.
