While strong cash flow is a key indicator of stability, it doesn’t always translate to superior returns. Some cash-heavy businesses struggle with inefficient spending, slowing demand, or weak competitive positioning.
Not all companies are created equal, and StockStory is here to surface the ones with real upside. Keeping that in mind, here are three cash-producing companies to avoid and some better opportunities instead.
Hain Celestial (HAIN)
Trailing 12-Month Free Cash Flow Margin: 2.3%
Sold in over 75 countries around the world, Hain Celestial (NASDAQ: HAIN) is a natural and organic food company whose products range from snacks to teas to baby food.
Why Should You Sell HAIN?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Forecasted revenue decline of 5% for the upcoming 12 months implies demand will fall even further
- Sales were less profitable over the last three years as its earnings per share fell by 43.9% annually, worse than its revenue declines
At $1.86 per share, Hain Celestial trades at 4.7x forward P/E. Dive into our free research report to see why there are better opportunities than HAIN.
Disney (DIS)
Trailing 12-Month Free Cash Flow Margin: 11.6%
Founded by brothers Walt and Roy, Disney (NYSE: DIS) is a multinational entertainment conglomerate, renowned for its theme parks, movies, television networks, and merchandise.
Why Is DIS Risky?
- Sizable revenue base leads to growth challenges as its 3.7% annual revenue increases over the last five years fell short of other consumer discretionary companies
- Capital intensity will likely increase as its free cash flow margin is anticipated to drop by 5.3 percentage points over the next year
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
Disney’s stock price of $112.25 implies a valuation ratio of 20.5x forward P/E. To fully understand why you should be careful with DIS, check out our full research report (it’s free).
Crocs (CROX)
Trailing 12-Month Free Cash Flow Margin: 21.6%
Founded in 2002, Crocs (NASDAQ: CROX) sells casual footwear and is known for its iconic clog shoe.
Why Does CROX Worry Us?
- Constant currency revenue growth has disappointed over the past two years and shows demand was soft
- Capital intensity will likely ramp up in the next year as its free cash flow margin is expected to contract by 2.2 percentage points
- Eroding returns on capital suggest its historical profit centers are aging
Crocs is trading at $116.57 per share, or 9.3x forward P/E. If you’re considering CROX for your portfolio, see our FREE research report to learn more.
Stocks We Like 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.
