Generating cash is essential for any business, but not all cash-rich companies are great investments. Some produce plenty of cash but fail to allocate it effectively, leading to missed opportunities.

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 that don’t make the cut and some better opportunities instead.

Commerce (CMRC)

Trailing 12-Month Free Cash Flow Margin: 8.3%

As a founding member of the MACH Alliance advocating for modern tech standards, Commerce (NASDAQ: CMRC) provides a SaaS platform that enables businesses to build and manage online stores, connect with marketplaces, and integrate with point-of-sale systems.

Why Should You Sell CMRC?

1. Average billings growth of 2.4% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
2. Estimated sales growth of 4.1% for the next 12 months implies demand will slow from its two-year trend
3. Low free cash flow margin of 8.3% for the last year gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders

At $4.53 per share, Commerce trades at 1x forward price-to-sales. Read our free research report to see why you should think twice about including CMRC in your portfolio.

Boot Barn (BOOT)

Trailing 12-Month Free Cash Flow Margin: 2.7%

With a strong store presence in Texas, California, Florida, and Oklahoma, Boot Barn (NYSE: BOOT) is a western-inspired apparel and footwear retailer.

Why Is BOOT Not Exciting?

1. Muted 9.3% annual revenue growth over the last three years shows its demand lagged behind its consumer retail peers
2. Modest revenue base of $2.07 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
3. Widely-available products (and therefore stiff competition) result in an inferior gross margin of 37.5% that must be offset through higher volumes

Boot Barn’s stock price of $196.29 implies a valuation ratio of 25.5x forward P/E. To fully understand why you should be careful with BOOT, check out our full research report (it’s free for active Edge members).

Tyson Foods (TSN)

Trailing 12-Month Free Cash Flow Margin: 2.2%

Started as a simple trucking business, Tyson Foods (NYSE: TSN) is one of the world’s largest producers of chicken, beef, and pork.

Why Should You Dump TSN?

1. Sales stagnated over the last three years and signal the need for new growth strategies
2. Gross margin of 7.2% is below its competitors, leaving less money to invest in areas like marketing and production facilities
3. Sales over the last three years were less profitable as its earnings per share fell by 22.1% annually while its revenue was flat

Tyson Foods is trading at $56.83 per share, or 14.8x forward P/E. Dive into our free research report to see why there are better opportunities than TSN.

High-Quality Stocks for All Market Conditions

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