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.
Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. That said, here are three cash-producing companies to avoid and some better opportunities instead.
Atkore (ATKR)
Trailing 12-Month Free Cash Flow Margin: 6.9%
Protecting the things that power our world, Atkore (NYSE:ATKR) designs and manufactures electrical safety products.
Why Do We Avoid ATKR?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 9 percentage points
- Eroding returns on capital suggest its historical profit centers are aging
Atkore’s stock price of $65.87 implies a valuation ratio of 12.6x forward P/E. Dive into our free research report to see why there are better opportunities than ATKR.
Flex (FLEX)
Trailing 12-Month Free Cash Flow Margin: 4.3%
Originally known as Flextronics until its 2016 rebranding, Flex (NASDAQ:FLEX) is a global manufacturing partner that designs, engineers, and builds products for companies across industries from medical devices to solar trackers.
Why Is FLEX Not Exciting?
- Sales were flat over the last two years, indicating it’s failed to expand this cycle
- Low free cash flow margin of 2.8% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- Diminishing returns on capital suggest its earlier profit pools are drying up
At $59.78 per share, Flex trades at 16.8x forward P/E. Read our free research report to see why you should think twice about including FLEX in your portfolio.
Taboola (TBLA)
Trailing 12-Month Free Cash Flow Margin: 9%
Often appearing as those "You May Also Like" or "Recommended For You" boxes at the bottom of news articles, Taboola (NASDAQ:TBLA) operates a digital platform that recommends personalized content to users across publisher websites, helping both publishers monetize their sites and advertisers reach target audiences.
Why Are We Hesitant About TBLA?
- Efficiency has decreased over the last five years as its adjusted operating margin fell by 1.3 percentage points
- Earnings per share have contracted by 25.3% annually over the last four years, a headwind for returns as stock prices often echo long-term EPS performance
- Negative returns on capital show that some of its growth strategies have backfired
Taboola is trading at $3.62 per share, or 8.5x forward P/E. Check out our free in-depth research report to learn more about why TBLA doesn’t pass our bar.
Stocks We Like More
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 9 Market-Beating Stocks. 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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.