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.
Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. Keeping that in mind, here are three cash-producing companies to avoid and some better opportunities instead.
Trailing 12-Month Free Cash Flow Margin: 16.9%
Processing over 325 billion data points annually from more than 150 million connected devices, Alarm.com $(ALRM)$ provides cloud-based platforms that enable residential and commercial property owners to remotely monitor and control their security, video, energy, and other connected devices.
Why Is ALRM Not Exciting?
Alarm.com is trading at $56.98 per share, or 3.4x forward price-to-sales. Read our free research report to see why you should think twice about including ALRM in your portfolio.
Trailing 12-Month Free Cash Flow Margin: 9.2%
Founded in 1965, Universal Technical Institute $(UTI)$ is a leading provider of technical training programs, specializing in automotive, diesel, collision repair, motorcycle, and marine technicians.
Why Are We Out on UTI?
At $26.80 per share, Universal Technical Institute trades at 11.9x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why UTI doesn’t pass our bar.
Trailing 12-Month Free Cash Flow Margin: 7%
Founded in 1926, United Airlines Holdings $(UAL)$ operates a global airline network, providing passenger and cargo air transportation services across domestic and international routes.
Why Does UAL Worry Us?
United Airlines’s stock price of $97.25 implies a valuation ratio of 9x forward P/E. Dive into our free research report to see why there are better opportunities than UAL.
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 Strong Momentum 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-small-cap company Comfort Systems (+782% 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
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
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