A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.

Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. Keeping that in mind, here is one cash-producing company that leverages its financial strength to beat its competitors and two that may struggle to keep up.

Trailing 12-Month Free Cash Flow Margin: 7.3%

Spun off from National Oilwell Varco, DNOW (NYSE:DNOW) provides distribution and supply chain solutions for the energy and industrial end markets.

Why Are We Wary of DNOW?

Sales trends were unexciting over the last two years as its 2.5% annual growth was below the typical industrials company

High input costs result in an inferior gross margin of 22.7% that must be offset through higher volumes

Flat earnings per share over the last two years underperformed the sector average

DNOW is trading at $16.14 per share, or 0.3x forward price-to-sales. Read our free research report to see why you should think twice about including DNOW in your portfolio, it’s free.

Trailing 12-Month Free Cash Flow Margin: 14.2%

With a unique business model combining end-of-life care and household services, Chemed (NYSE:CHE) operates two distinct businesses: VITAS, which provides hospice care for terminally ill patients, and Roto-Rooter, which offers plumbing and water restoration services.

Why Is CHE Not Exciting?

Sales trends were unexciting over the last five years as its 4.1% annual growth was below the typical healthcare company

Day-to-day expenses have swelled relative to revenue over the last five years as its adjusted operating margin fell by 4.3 percentage points

Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

At $473.11 per share, Chemed trades at 18.9x forward P/E. Check out our free in-depth research report to learn more about why CHE doesn’t pass our bar.

Trailing 12-Month Free Cash Flow Margin: 21.7%

Tracing its roots back to 1853 when it insured travelers against accidents on steamboats and railroads, Travelers (NYSE:TRV) provides a wide range of commercial and personal property and casualty insurance products to businesses, government units, associations, and individuals.

Why Could TRV Be a Winner?

Underwriting operating profits and efficiency rose over the last two years as it benefited from some fixed cost leverage

Share repurchases have amplified shareholder returns as its annual earnings per share growth of 45.2% exceeded its revenue gains over the last two years

Capital generation for the next 12 months is expected to accelerate above its two-year trend as Wall Street forecasts robust book value per share growth of 19.3%

Travelers’s stock price of $298.37 implies a valuation ratio of 1.7x forward P/B. Is now the right time to buy? Find out in our full research report, it’s free.

If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.

Don’t wait for the next volatility shock. Check 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 244% over the last five years (as of June 30, 2025).

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.