A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.

Luckily for you, we built StockStory to help you separate the good from the bad. Keeping that in mind, here are three cash-producing companies to avoid and some better opportunities instead.

Comcast (CMCSA)

Trailing 12-Month Free Cash Flow Margin: 13.6%

Formerly known as American Cable Systems, Comcast (NASDAQ: CMCSA) is a multinational telecommunications company offering a wide range of services.

Why Should You Dump CMCSA?

1. Number of domestic broadband customers has disappointed over the past two years, indicating weak demand for its offerings
2. Free cash flow margin is forecasted to shrink by 3.5 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
3. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value

Comcast is trading at $24.89 per share, or 7x forward P/E. Read our free research report to see why you should think twice about including CMCSA in your portfolio.

Hub Group (HUBG)

Trailing 12-Month Free Cash Flow Margin: 3.3%

Started with $10,000, Hub Group (NASDAQ: HUBG) is a provider of intermodal, truck brokerage, and logistics services, facilitating transportation solutions for businesses worldwide.

Why Do We Pass on HUBG?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 9% annually over the last two years
2. Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable
3. Diminishing returns on capital suggest its earlier profit pools are drying up

Hub Group’s stock price of $38.36 implies a valuation ratio of 20.1x forward P/E. To fully understand why you should be careful with HUBG, check out our full research report (it’s free).

Integer Holdings (ITGR)

Trailing 12-Month Free Cash Flow Margin: 5.4%

With its name reflecting the mathematical term for "whole" or "complete," Integer Holdings (NYSE: ITGR) is a medical device outsource manufacturer that produces components and systems for cardiac, vascular, neurological, and other medical applications.

Why Are We Cautious About ITGR?

1. Smaller revenue base of $1.86 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
2. Demand is forecasted to shrink as its estimated sales for the next 12 months are flat
3. ROIC of 5.4% reflects management’s challenges in identifying attractive investment opportunities

At $90.46 per share, Integer Holdings trades at 14.1x forward P/E. Read our free research report to see why you should think twice about including ITGR in your portfolio.

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