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 that don’t make the cut and some better opportunities instead.
UiPath (PATH)
Trailing 12-Month Free Cash Flow Margin: 23.7%
Started in 2005 in Romania as a tech outsourcing company, UiPath (NYSE: PATH) makes software that helps companies automate repetitive computer tasks.
Why Does PATH Give Us Pause?
- Average billings growth of 4.2% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
- Long payback periods on sales and marketing expenses limit customer growth and signal the company operates in a highly competitive environment
- Historical operating margin losses point to an inefficient cost structure
UiPath’s stock price of $12.92 implies a valuation ratio of 4.5x forward price-to-sales. Dive into our free research report to see why there are better opportunities than PATH.
Best Buy (BBY)
Trailing 12-Month Free Cash Flow Margin: 3%
With humble beginnings as a stereo equipment seller, Best Buy (NYSE: BBY) now sells a broad selection of consumer electronics, appliances, and home office products.
Why Is BBY Not Exciting?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
- Commoditized inventory, bad unit economics, and high competition are reflected in its low gross margin of 22.4%
- Operating margin of 3.3% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
Best Buy is trading at $69.20 per share, or 11.2x forward P/E. Check out our free in-depth research report to learn more about why BBY doesn’t pass our bar.
NetApp (NTAP)
Trailing 12-Month Free Cash Flow Margin: 20.4%
Founded in 1992 as a pioneer in networked storage technology, NetApp (NASDAQ: NTAP) provides data storage and management solutions that help organizations store, protect, and optimize their data across on-premises data centers and public clouds.
Why Are We Cautious About NTAP?
- Average billings growth of 3% over the past two years was subpar, suggesting it struggled to push its products and might have to lower prices to stimulate demand
- Estimated sales growth of 2.7% for the next 12 months is soft and implies weaker demand
- Free cash flow margin was stuck in limbo over the last five years
At $104.86 per share, NetApp trades at 13.5x forward P/E. Read our free research report to see why you should think twice about including NTAP in your portfolio.
Stocks We Like More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
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 Kadant (+351% five-year return). Find your next big winner with StockStory today for free.
