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 to avoid and some better opportunities instead.

Hershey (HSY)

Trailing 12-Month Free Cash Flow Margin: 16.9%

Best known for its milk chocolate bar and Hershey's Kisses, Hershey (NYSE: HSY) is an iconic company known for its chocolate products.

Why Is HSY Not Exciting?

1. Falling unit sales over the past two years show it’s struggled to move its products and had to rely on price increases
2. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
3. Day-to-day expenses have swelled relative to revenue over the last year as its operating margin fell by 4.1 percentage points

Hershey is trading at $177.33 per share, or 28.7x forward P/E. Read our free research report to see why you should think twice about including HSY in your portfolio.

Veralto (VLTO)

Trailing 12-Month Free Cash Flow Margin: 16.3%

Spun off from Danaher in 2023, Veralto (NYSE: VLTO) provides water analytics and treatment solutions.

Why Should You Sell VLTO?

1. Annual revenue growth of 3.6% over the last two years was below our standards for the industrials sector
2. Projected sales growth of 3.8% for the next 12 months suggests sluggish demand
3. Revenue growth over the past two years was nullified by the company’s new share issuances as its earnings per share fell by 1.7% annually

At $102.83 per share, Veralto trades at 27.6x forward P/E. If you’re considering VLTO for your portfolio, see our FREE research report to learn more.

FTI Consulting (FCN)

Trailing 12-Month Free Cash Flow Margin: 4.3%

With a team of experts deployed across 30+ countries to tackle complex business challenges, FTI Consulting (NYSE: FCN) is a global business advisory firm that helps organizations manage change, mitigate risk, and resolve disputes across financial, legal, operational, and regulatory matters.

Why Are We Hesitant About FCN?

1. Estimated sales growth of 1.3% for the next 12 months implies demand will slow from its two-year trend
2. Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 2.8 percentage points
3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 5.6 percentage points

FTI Consulting’s stock price of $163.86 implies a valuation ratio of 20.3x forward P/E. Dive into our free research report to see why there are better opportunities than FCN.

High-Quality Stocks for All Market Conditions

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 9 Market-Beating Stocks. 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