A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. Keeping that in mind, here are three cash-producing companies to avoid and some better opportunities instead.
LiveRamp (RAMP)
Trailing 12-Month Free Cash Flow Margin: 19.2%
Serving as the digital middleman in an increasingly privacy-conscious world, LiveRamp (NYSE: RAMP) provides technology that helps companies securely share and connect their customer data with trusted partners while maintaining privacy compliance.
Why Are We Cautious About RAMP?
- ARR growth averaged a weak 8.9% over the last year, suggesting that competition is pulling some attention away from its software
- Estimated sales growth of 7.8% for the next 12 months implies demand will slow from its two-year trend
- Operating margin improvement of 1.8 percentage points over the last year demonstrates its ability to scale efficiently
At $27.89 per share, LiveRamp trades at 2.3x forward price-to-sales. Check out our free in-depth research report to learn more about why RAMP doesn’t pass our bar.
Carrier Global (CARR)
Trailing 12-Month Free Cash Flow Margin: 5.1%
Founded by the inventor of air conditioning, Carrier Global (NYSE: CARR) manufactures heating, ventilation, air conditioning, and refrigeration products.
Why Do We Think CARR Will Underperform?
- 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
- Estimated sales growth of 1.4% for the next 12 months implies demand will slow from its two-year trend
- Diminishing returns on capital suggest its earlier profit pools are drying up
Carrier Global’s stock price of $58.92 implies a valuation ratio of 19.4x forward P/E. Dive into our free research report to see why there are better opportunities than CARR.
Corcept (CORT)
Trailing 12-Month Free Cash Flow Margin: 25.2%
Focusing on the powerful stress hormone that affects everything from metabolism to immune function, Corcept Therapeutics (NASDAQ: CORT) develops and markets medications that modulate cortisol to treat endocrine disorders, cancer, and neurological diseases.
Why Are We Wary of CORT?
- Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 16.9 percentage points
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 2.8% annually
- Eroding returns on capital suggest its historical profit centers are aging
Corcept is trading at $71.61 per share, or 72.7x forward P/E. To fully understand why you should be careful with CORT, check out our full research report (it’s free for active Edge members).
Stocks We Like More
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Take advantage of the rebound by checking out our Top 6 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).
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