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.

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

Box (BOX)

Trailing 12-Month Free Cash Flow Margin: 27.2%

Founded in 2005 by Aaron Levie and Dylan Smith, Box (NYSE: BOX) provides organizations with software to securely store, share and collaborate around work documents in the cloud.

Why Do We Think Twice About BOX?

1. Sales trends were unexciting over the last three years as its 6.6% annual growth was well below the typical software company
2. Projected sales growth of 7.9% for the next 12 months suggests sluggish demand
3. Capital intensity will likely increase as its free cash flow margin is anticipated to drop by 1.5 percentage points over the next year

Box is trading at $33.85 per share, or 4.2x forward price-to-sales. Dive into our free research report to see why there are better opportunities than BOX.

Lowe's (LOW)

Trailing 12-Month Free Cash Flow Margin: 8%

Founded in North Carolina as Lowe's North Wilkesboro Hardware, the company is a home improvement retailer that sells everything from paint to tools to building materials.

Why Are We Cautious About LOW?

1. Store closures and poor same-store sales reveal weak demand and a push toward operational efficiency
2. Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
3. Widely-available products (and therefore stiff competition) result in an inferior gross margin of 33.3% that must be offset through higher volumes

At $228.79 per share, Lowe's trades at 18.2x forward P/E. Read our free research report to see why you should think twice about including LOW in your portfolio.

Manitowoc (MTW)

Trailing 12-Month Free Cash Flow Margin: 2.2%

Contracted by the United States Navy during WWII, Manitowoc (NYSE: MTW) provides cranes and lifting equipment.

Why Do We Think MTW Will Underperform?

1. Backlog has dropped by 12.4% on average over the past two years, suggesting it’s losing orders as competition picks up
2. Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 17.1% annually
3. Underwhelming 1.5% return on capital reflects management’s difficulties in finding profitable growth opportunities

Manitowoc’s stock price of $12.31 implies a valuation ratio of 16.5x forward P/E. To fully understand why you should be careful with MTW, check out our full research report (it’s free).

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. Find your next big winner with StockStory today. Find your next big winner with StockStory today