While strong cash flow is a key indicator of stability, it doesn’t always translate to superior returns. Some cash-heavy businesses struggle with inefficient spending, slowing demand, or weak competitive positioning.

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 to avoid and some better opportunities instead.

fuboTV (FUBO)

Trailing 12-Month Free Cash Flow Margin: 8.7%

Originally launched as a soccer streaming platform, fuboTV (NYSE: FUBO) is a video streaming service specializing in live sports, news, and entertainment content.

Why Do We Avoid FUBO?

1. Number of domestic subscribers has disappointed over the past two years, indicating weak demand for its offerings
2. Poor expense management has led to operating margin losses
3. Free cash flow margin is forecasted to shrink by 6.5 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors

fuboTV is trading at $4.02 per share, or 86.6x forward P/E. If you’re considering FUBO for your portfolio, see our FREE research report to learn more.

Hormel Foods (HRL)

Trailing 12-Month Free Cash Flow Margin: 5.2%

Best known for its SPAM brand, Hormel (NYSE: HRL) is a packaged foods company with products that span meat, poultry, shelf-stable foods, and spreads.

Why Are We Hesitant About HRL?

1. Falling unit sales over the past two years suggest it might have to lower prices to stimulate growth
2. Gross margin of 16.6% is below its competitors, leaving less money to invest in areas like marketing and production facilities
3. Performance over the past three years shows each sale was less profitable as its earnings per share dropped by 7% annually, worse than its revenue

At $25.65 per share, Hormel Foods trades at 14.6x forward P/E. To fully understand why you should be careful with HRL, check out our full research report (it’s free).

Teleflex (TFX)

Trailing 12-Month Free Cash Flow Margin: 13.1%

With a portfolio spanning from vascular access catheters to minimally invasive surgical tools, Teleflex (NYSE: TFX) designs, manufactures, and supplies single-use medical devices used in critical care and surgical procedures across hospitals worldwide.

Why Are We Cautious About TFX?

1. Muted 2.4% annual revenue growth over the last two years shows its demand lagged behind its healthcare peers
2. Underwhelming constant currency revenue performance over the past two years suggests its product offering at current prices doesn’t resonate with customers
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

Teleflex’s stock price of $131.17 implies a valuation ratio of 9.7x forward P/E. Dive into our free research report to see why there are better opportunities than TFX.

Stocks We Like More

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