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

Not all companies are created equal, and StockStory is here to surface the ones with real upside. That said, here are three cash-producing companies that don’t make the cut and some better opportunities instead.

Deere (DE)

Trailing 12-Month Free Cash Flow Margin: 15.7%

Revolutionizing agriculture with the first self-polishing cast-steel plow in the 1800s, Deere (NYSE: DE) manufactures and distributes advanced agricultural, construction, forestry, and turf care equipment.

Why Should You Sell DE?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 6.2% annually over the last two years
2. Free cash flow margin shrank by 7.1 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
3. High net-debt-to-EBITDA ratio of 6× could force the company to raise capital at unfavorable terms if market conditions deteriorate

Deere’s stock price of $464.99 implies a valuation ratio of 22.5x forward price-to-earnings. If you’re considering DE for your portfolio, see our FREE research report to learn more.

Sherwin-Williams (SHW)

Trailing 12-Month Free Cash Flow Margin: 5.9%

Widely known for its success in the paint industry, Sherwin-Williams (NYSE: SHW) is a manufacturer of paints, coatings, and related products.

Why Are We Cautious About SHW?

1. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
2. Projected sales growth of 2% for the next 12 months suggests sluggish demand
3. 8.4 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position

At $337.47 per share, Sherwin-Williams trades at 26.4x forward price-to-earnings. Read our free research report to see why you should think twice about including SHW in your portfolio.

Revvity (RVTY)

Trailing 12-Month Free Cash Flow Margin: 19.7%

Formerly known as PerkinElmer until its rebranding in 2023, Revvity (NYSE: RVTY) provides health science technologies and services that support the complete workflow from discovery to development and diagnosis to cure.

Why Do We Avoid RVTY?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
2. Adjusted operating margin declined by 8.8 percentage points over the last two years as its sales cratered
3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

Revvity is trading at $93.99 per share, or 18.5x forward price-to-earnings. Check out our free in-depth research report to learn more about why RVTY doesn’t pass our bar.

Stocks We Like More

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Axon (+711% five-year return). Find your next big winner with StockStory today for free.