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. Keeping that in mind, here are three cash-producing companies that don’t make the cut and some better opportunities instead.

Tyson Foods (TSN)

Trailing 12-Month Free Cash Flow Margin: 2.4%

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

Why Do We Think TSN Will Underperform?

1. Sizable revenue base leads to growth challenges as its 1.1% annual revenue increases over the last three years fell short of other consumer staples companies
2. Gross margin of 7.4% is an output of its commoditized products
3. Earnings per share have dipped by 25.5% annually over the past three years, which is concerning because stock prices follow EPS over the long term

Tyson Foods is trading at $53.58 per share, or 13.7x forward P/E. Read our free research report to see why you should think twice about including TSN in your portfolio.

Casella Waste Systems (CWST)

Trailing 12-Month Free Cash Flow Margin: 11%

Starting with the founder picking up garbage with a pickup truck he purchased using savings from high school, Casella (NASDAQ: CWST) offers waste management services for businesses, residents, and the government.

Why Do We Think Twice About CWST?

1. Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
2. Efficiency has decreased over the last five years as its operating margin fell by 4.7 percentage points
3. Below-average returns on capital indicate management struggled to find compelling investment opportunities, and its decreasing returns suggest its historical profit centers are aging

At $88.40 per share, Casella Waste Systems trades at 72.5x forward P/E. If you’re considering CWST for your portfolio, see our FREE research report to learn more.

Rogers (ROG)

Trailing 12-Month Free Cash Flow Margin: 6.4%

With roots dating back to 1832, making it one of America's oldest continuously operating companies, Rogers (NYSE: ROG) designs and manufactures specialized engineered materials and components used in electric vehicles, telecommunications, renewable energy, and other high-performance applications.

Why Do We Avoid ROG?

1. Flat sales over the last five years suggest it must find different ways to grow during this cycle
2. Sales over the last five years were less profitable as its earnings per share fell by 15.3% annually while its revenue was flat
3. 8.7 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

Rogers’s stock price of $81.75 implies a valuation ratio of 29x forward P/E. Dive into our free research report to see why there are better opportunities than ROG.

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