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.
Nike (NKE)
Trailing 12-Month Free Cash Flow Margin: 6.5%
Originally selling Japanese Onitsuka Tiger sneakers as Blue Ribbon Sports, Nike (NYSE: NKE) is a global titan in athletic footwear, apparel, equipment, and accessories.
Why Should You Sell NKE?
- Underwhelming constant currency revenue performance over the past two years suggests its product offering at current prices doesn’t resonate with customers
- Capital intensity will likely increase as its free cash flow margin is anticipated to drop by 2.9 percentage points over the next year
- Waning returns on capital imply its previous profit engines are losing steam
Nike is trading at $61.93 per share, or 32.9x forward P/E. Dive into our free research report to see why there are better opportunities than NKE.
DistributionNOW (DNOW)
Trailing 12-Month Free Cash Flow Margin: 7.3%
Spun off from National Oilwell Varco, DistributionNOW (NYSE: DNOW) provides distribution and supply chain solutions for the energy and industrial end markets.
Why Are We Cautious About DNOW?
- Muted 2.5% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 3.7%
- Flat earnings per share over the last two years underperformed the sector average
DistributionNOW’s stock price of $13.57 implies a valuation ratio of 32.7x forward EV-to-EBITDA. To fully understand why you should be careful with DNOW, check out our full research report (it’s free for active Edge members).
General Motors (GM)
Trailing 12-Month Free Cash Flow Margin: 7.9%
Founded in 1908 by William C. Durant, General Motors (NYSE: GM) offers a range of vehicles and automobiles through brands such as Chevrolet, Buick, GMC, and Cadillac.
Why Is GM Not Exciting?
- Weak unit sales over the past two years imply it may need to invest in improvements to get back on track
- Estimated sales decline of 1.4% for the next 12 months implies a challenging demand environment
- Gross margin of 12% reflects its high production costs
At $69.03 per share, General Motors trades at 6.3x forward P/E. Dive into our free research report to see why there are better opportunities than GM.
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 6 Stocks for this week. 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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