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. That said, here are two cash-producing companies that leverage their financial strength to beat the competition and one that may struggle to keep up.

One Stock to Sell:

Herc (HRI)

Trailing 12-Month Free Cash Flow Margin: 7.5%

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 Is HRI Not Exciting?

1. Estimated sales growth of 2.2% for the next 12 months implies demand will slow from its two-year trend
2. Earnings per share were flat over the last two years and fell short of the peer group average
3. 18 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position

Herc’s stock price of $126.38 implies a valuation ratio of 9.7x forward P/E. Read our free research report to see why you should think twice about including HRI in your portfolio, it’s free.

Two Stocks to Watch:

Booking (BKNG)

Trailing 12-Month Free Cash Flow Margin: 35.2%

Formerly known as The Priceline Group, Booking Holdings (NASDAQ:BKNG) is the world’s largest online travel agency.

Why Are We Bullish on BKNG?

1. Room Nights Booked are rising, meaning the company can increase revenue without incurring additional customer acquisition costs if it can cross-sell additional products and features
2. Share repurchases have amplified shareholder returns as its annual earnings per share growth of 51.8% exceeded its revenue gains over the last three years
3. BKNG is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders

Booking is trading at $5,330 per share, or 19.1x forward EV/EBITDA. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.

Urban Outfitters (URBN)

Trailing 12-Month Free Cash Flow Margin: 5.1%

Founded as a purveyor of vintage items, Urban Outfitters (NASDAQ:URBN) now largely sells new apparel and accessories to teens and young adults seeking on-trend fashion.

Why Is URBN on Our Radar?

1. Same-store sales growth averaged 4.2% over the past two years, showing it’s bringing new and repeat shoppers into its stores
2. Sales outlook for the upcoming 12 months calls for 8.2% growth, an acceleration from its six-year trend
3. Earnings growth has trumped its peers over the last five years as its EPS has compounded at 46.7% annually

At $72.28 per share, Urban Outfitters trades at 16.1x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.

Stocks We Like Even More

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.