Businesses with strong free cash flow tend to be more adaptable and resilient. Some of these companies shine bright by using their cash wisely to strengthen their market positions.
Not all companies are created equal, and StockStory is here to surface the ones with real upside. That said, here are three cash-producing companies that leverage their financial strength to beat the competition.
Airbnb (ABNB)
Trailing 12-Month Free Cash Flow Margin: 36.9%
Founded by Brian Chesky and Joe Gebbia in their San Francisco apartment, Airbnb (NASDAQ: ABNB) is the world’s largest online marketplace for lodging, primarily homestays.
Why Will ABNB Beat the Market?
- Nights and Experiences Booked have grown by 10% annually, allowing for more profitable cross-selling opportunities if it can build complementary products and features
- Share buybacks catapulted its annual earnings per share growth to 28.4%, which outperformed its revenue gains over the last three years
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
At $126.10 per share, Airbnb trades at 18.1x forward EV/EBITDA. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .
Doximity (DOCS)
Trailing 12-Month Free Cash Flow Margin: 48.7%
With over 80% of U.S. physicians as members of its digital community, Doximity (NYSE: DOCS) operates a digital platform that enables physicians and other healthcare professionals to collaborate, stay current with medical news, manage their careers, and conduct virtual patient visits.
Why Will DOCS Outperform?
- Winning new contracts that can potentially increase in value as its billings growth has averaged 19.8% over the last year
- User-friendly software enables clients to ramp up spending quickly, leading to the speedy recovery of customer acquisition costs
- Strong free cash flow margin of 48.7% enables it to reinvest or return capital consistently
Doximity’s stock price of $67 implies a valuation ratio of 20.5x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
Urban Outfitters (URBN)
Trailing 12-Month Free Cash Flow Margin: 6.8%
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 Does URBN Stand Out?
- Same-store sales provide a solid foundation for the steady expansion of its stores
- Brick-and-mortar locations are witnessing elevated demand as their same-store sales growth averaged 4.3% over the past two years
- Earnings per share grew by 64.3% annually over the last five years, massively outpacing its peers
Urban Outfitters is trading at $64.61 per share, or 12.1x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free for active Edge members.
Stocks We Like Even More
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