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.
Expeditors (EXPD)
Trailing 12-Month Free Cash Flow Margin: 8.3%
Expeditors (NYSE:EXPD) offers air and ocean freight as well as brokerage services.
Why Is EXPD Not Exciting?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 3.3% over the last two years was below our standards for the industrials sector
- High input costs result in an inferior gross margin of 13.4% that must be offset through higher volumes
- Waning returns on capital imply its previous profit engines are losing steam
Expeditors is trading at $159.07 per share, or 27.3x forward P/E. If you’re considering EXPD for your portfolio, see our FREE research report to learn more.
Stanley Black & Decker (SWK)
Trailing 12-Month Free Cash Flow Margin: 2.4%
With an iconic “STANLEY” logo which has remained virtually unchanged for over a century, Stanley Black & Decker (NYSE:SWK) is a manufacturer primarily catering to the tool and outdoor equipment industry.
Why Do We Steer Clear of SWK?
- 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
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 9.6% annually
- Free cash flow margin dropped by 5.7 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Stanley Black & Decker’s stock price of $82.32 implies a valuation ratio of 16.3x forward P/E. To fully understand why you should be careful with SWK, check out our full research report (it’s free).
Fiserv (FISV)
Trailing 12-Month Free Cash Flow Margin: 24.1%
Powering over 1 billion accounts and processing more than 12,000 financial transactions per second globally, Fiserv (NASDAQ:FISV) provides payment processing and financial technology solutions that enable merchants, banks, and credit unions to accept payments and manage financial transactions.
Why Do We Think Twice About FISV?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 6.1% for the last two years
- Underwhelming 8.9% return on equity reflects management’s difficulties in finding profitable growth opportunities
At $67.55 per share, Fiserv trades at 8.6x forward P/E. Dive into our free research report to see why there are better opportunities than FISV.
Stocks We Like More
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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.