Laser Focus World is an industry bedrock—first published in 1965 and still going strong. We publish original articles about cutting-edge advances in lasers, optics, photonics, sensors, and quantum technologies, as well as test and measurement, and the shift currently underway to usher in the photonic integrated circuits, optical interconnects, and copackaged electronics and photonics to deliver the speed and efficiency essential for data centers of the future.

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Editorial Advisory Board

  • Professor Andrea M. Armani, University of Southern California
  • Ruti Ben-Shlomi, Ph.D., LightSolver
  • James Butler, Ph.D., Hamamatsu
  • Natalie Fardian-Melamed, Ph.D., Columbia University
  • Justin Sigley, Ph.D., AmeriCOM
  • Professor Birgit Stiller, Max Planck Institute for the Science of Light, and Leibniz University of Hannover
  • Professor Stephen Sweeney, University of Glasgow
  • Mohan Wang, Ph.D., University of Oxford
  • Professor Xuchen Wang, Harbin Engineering University
  • Professor Stefan Witte, Delft University of Technology

3 Cash-Producing Stocks in the Doghouse

BFAM Cover Image

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 that don’t make the cut and some better opportunities instead.

Bright Horizons (BFAM)

Trailing 12-Month Free Cash Flow Margin: 9%

Founded in 1986, Bright Horizons (NYSE: BFAM) is a global provider of child care, early education, and workforce support solutions.

Why Do We Pass on BFAM?

  1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
  2. Incremental sales over the last five years were much less profitable as its earnings per share fell by 1.1% annually while its revenue grew
  3. Underwhelming 4.3% return on capital reflects management’s difficulties in finding profitable growth opportunities

Bright Horizons is trading at $120.64 per share, or 30.3x forward price-to-earnings. If you’re considering BFAM for your portfolio, see our FREE research report to learn more.

Strategic Education (STRA)

Trailing 12-Month Free Cash Flow Margin: 9.5%

Formed through the merger of Strayer Education and Capella Education in 2018, Strategic Education (NASDAQ: STRA) is a career-focused higher education provider.

Why Should You Dump STRA?

  1. Performance surrounding its domestic students has lagged its peers
  2. Earnings per share fell by 6.6% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
  3. Underwhelming 3.7% return on capital reflects management’s difficulties in finding profitable growth opportunities

Strategic Education’s stock price of $80.93 implies a valuation ratio of 14.2x forward price-to-earnings. Read our free research report to see why you should think twice about including STRA in your portfolio.

Arlo Technologies (ARLO)

Trailing 12-Month Free Cash Flow Margin: 9.5%

Originally spun off from networking equipment maker Netgear in 2018, Arlo Technologies (NYSE: ARLO) provides cloud-based smart security devices and subscription services that help consumers and businesses monitor and protect their homes, properties, and loved ones.

Why Are We Cautious About ARLO?

  1. 2.1% annual revenue growth over the last two years was slower than its business services peers
  2. Modest revenue base of $510.9 million gives it less fixed cost leverage and fewer distribution channels than larger companies
  3. Cash burn makes us question whether it can achieve sustainable long-term growth

At $9.98 per share, Arlo Technologies trades at 18.7x forward price-to-earnings. Check out our free in-depth research report to learn more about why ARLO doesn’t pass our bar.

Stocks We Like More

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 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.

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