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.

Even among businesses with healthy cash flow, only a select few maximize its potential, and we’re here to pinpoint them. That said, here are three cash-producing companies that leverage their financial strength to beat the competition.

Abercrombie and Fitch (ANF)

Trailing 12-Month Free Cash Flow Margin: 7.4%

Founded as an outdoor and sporting brand, Abercrombie & Fitch (NYSE: ANF) evolved to become a specialty retailer that sells its own brand of fashionable clothing to young adults.

Why Is ANF a Good Business?

1. Same-store sales growth averaged 11.9% over the past two years, showing it’s bringing new and repeat shoppers into its stores
2. Unique assortment of products and pricing power are reflected in its best-in-class gross margin of 63.3%
3. Performance over the past three years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue

Abercrombie and Fitch is trading at $94.19 per share, or 9.1x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.

Vertiv (VRT)

Trailing 12-Month Free Cash Flow Margin: 18.7%

Formerly part of Emerson Electric, Vertiv (NYSE: VRT) manufactures and services infrastructure technology products for data centers and communication networks.

Why Is VRT a Top Pick?

1. Core business can prosper without any help from acquisitions as its organic revenue growth averaged 21.9% over the past two years
2. Free cash flow margin jumped by 16 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
3. Returns on capital are climbing as management makes more lucrative bets

At $244.38 per share, Vertiv trades at 38.2x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.

CRA (CRAI)

Trailing 12-Month Free Cash Flow Margin: 3.9%

Often retained for high-stakes matters with multibillion-dollar implications, CRA International (NASDAQ: CRAI) provides economic, financial, and management consulting services to corporations, law firms, and government agencies for litigation, regulatory proceedings, and business strategy.

Why Could CRAI Be a Winner?

1. Impressive 9.7% annual revenue growth over the last two years indicates it’s winning market share this cycle
2. Share buybacks catapulted its annual earnings per share growth to 27.6%, which outperformed its revenue gains over the last two years
3. Stellar returns on capital showcase management’s ability to surface highly profitable business ventures

CRA’s stock price of $158.97 implies a valuation ratio of 17.8x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.

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