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. Keeping that in mind, here are three cash-producing companies to steer clear of and a few better alternatives.

Sinclair (SBGI)

Trailing 12-Month Free Cash Flow Margin: 12.3%

With over 2,400 hours of local news produced weekly and 640 broadcast channels reaching millions of American homes, Sinclair (NASDAQ: SBGI) operates a network of 185 local television stations across 86 U.S. markets, producing news programming and distributing content from major networks.

Why Do We Think SBGI Will Underperform?

1. Sales tumbled by 9.2% annually over the last five years, showing market trends are working against its favor during this cycle
2. Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 8.2 percentage points

Sinclair is trading at $14.40 per share, or 1.9x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than SBGI.

AdaptHealth (AHCO)

Trailing 12-Month Free Cash Flow Margin: 7.1%

With a network of approximately 680 locations serving patients across all 50 states, AdaptHealth (NASDAQ: AHCO) provides home medical equipment, supplies, and related services to patients with chronic conditions like sleep apnea, diabetes, and respiratory disorders.

Why Does AHCO Fall Short?

1. 2.7% annual revenue growth over the last two years was slower than its healthcare peers
2. Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 1.1% annually
3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

At $9.49 per share, AdaptHealth trades at 7.8x forward P/E. To fully understand why you should be careful with AHCO, check out our full research report (it’s free).

Crane NXT (CXT)

Trailing 12-Month Free Cash Flow Margin: 11.1%

Born from a corporate transformation completed in 2023, Crane NXT (NYSE: CXT) provides specialized technology solutions for payment processing, banknote security, and authentication systems for financial institutions and businesses.

Why Do We Think Twice About CXT?

1. 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
2. Incremental sales over the last two years were much less profitable as its earnings per share fell by 15% annually while its revenue grew
3. Free cash flow margin dropped by 12 percentage points over the last four years, implying the company became more capital intensive as competition picked up

Crane NXT’s stock price of $59.73 implies a valuation ratio of 12.8x forward P/E. If you’re considering CXT for your portfolio, see our FREE research report to learn more.

Stocks We Like More

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Don’t let fear keep you from great opportunities and take a look at 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-small-cap company Exlservice (+354% 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

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