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 avoid and some better opportunities instead.

Wix (WIX)

Trailing 12-Month Free Cash Flow Margin: 29.4%

Powering over 263 million registered users worldwide with its AI-driven tools, Wix (NASDAQ: WIX) provides a cloud-based platform that helps individuals and businesses create and manage professional websites without requiring coding skills.

Why Are We Hesitant About WIX?

1. Sales trends were unexciting over the last three years as its 11.7% annual growth was below the typical software company
2. Steep infrastructure costs and weaker unit economics for a software company are reflected in its low gross margin of 68.4%

Wix’s stock price of $154 implies a valuation ratio of 4.3x forward price-to-sales. Dive into our free research report to see why there are better opportunities than WIX.

Deere (DE)

Trailing 12-Month Free Cash Flow Margin: 17.4%

Revolutionizing agriculture with the first self-polishing cast-steel plow in the 1800s, Deere (NYSE: DE) manufactures and distributes advanced agricultural, construction, forestry, and turf care equipment.

Why Do We Think Twice About DE?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 16.4% annually over the last two years
2. Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable
3. 7× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings

At $481.10 per share, Deere trades at 23.2x forward P/E. Check out our free in-depth research report to learn more about why DE doesn’t pass our bar.

Alight (ALIT)

Trailing 12-Month Free Cash Flow Margin: 6.1%

Born from a corporate spinoff in 2017 to focus on employee experience technology, Alight (NYSE: ALIT) provides human capital management solutions that help companies administer employee benefits, payroll, and workforce management systems.

Why Do We Think ALIT Will Underperform?

1. Annual sales declines of 2.5% for the past five years show its products and services struggled to connect with the market during this cycle
2. Earnings per share have dipped by 6% annually over the past two years, which is concerning because stock prices follow EPS over the long term
3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

Alight is trading at $3.71 per share, or 6x forward P/E. To fully understand why you should be careful with ALIT, check out our full research report (it’s free).

Stocks We Like More

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our Top 5 Growth Stocks for this month. 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

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