A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
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.
Mattel (MAT)
Trailing 12-Month Free Cash Flow Margin: 7.4%
Known for the creation of iconic toys such as Barbie and Hotwheels, Mattel (NASDAQ: MAT) is a global children's entertainment company specializing in the design and production of consumer products.
Why Is MAT Not Exciting?
- Muted 2.7% annual revenue growth over the last two years shows its demand lagged behind its consumer discretionary peers
- Estimated sales growth of 2.5% for the next 12 months is soft and implies weaker demand
- Diminishing returns on capital suggest its earlier profit pools are drying up
Mattel is trading at $17.54 per share, or 10.7x forward P/E. Check out our free in-depth research report to learn more about why MAT doesn’t pass our bar.
Emerson Electric (EMR)
Trailing 12-Month Free Cash Flow Margin: 14.1%
Founded in 1890, Emerson Electric (NYSE: EMR) is a multinational technology and engineering company providing solutions in the industrial, commercial, and residential markets.
Why Does EMR Fall Short?
- Sales stagnated over the last five years and signal the need for new growth strategies
- 4.9 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
- Diminishing returns on capital suggest its earlier profit pools are drying up
At $134.93 per share, Emerson Electric trades at 21.3x forward P/E. Dive into our free research report to see why there are better opportunities than EMR.
Brink's (BCO)
Trailing 12-Month Free Cash Flow Margin: 6.9%
Known for its iconic armored trucks that have been a fixture in American cities since 1859, Brink's (NYSE: BCO) provides secure transportation and management of cash and valuables for banks, retailers, and other businesses worldwide.
Why Are We Hesitant About BCO?
- Sales trends were unexciting over the last two years as its 3.5% annual growth was below the typical business services company
- 1.1 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
- Underwhelming 14% return on capital reflects management’s difficulties in finding profitable growth opportunities
Brink’s stock price of $115.19 implies a valuation ratio of 14.3x forward P/E. Read our free research report to see why you should think twice about including BCO in your portfolio.
High-Quality Stocks for All Market Conditions
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
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-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
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
