A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. That said, here are three cash-producing companies that don’t make the cut and some better opportunities instead.
Fresh Del Monte Produce (FDP)
Trailing 12-Month Free Cash Flow Margin: 4.2%
Translating to "of the mountain" in Spanish, Fresh Del Monte (NYSE: FDP) is a leader in providing high-quality, sustainably grown fresh fruits and vegetables.
Why Do We Avoid FDP?
- Sales were flat over the last three years, indicating it’s failed to expand its business
- Projected sales decline of 2.9% for the next 12 months points to an even tougher demand environment ahead
- Easily substituted products (and therefore stiff competition) result in an inferior gross margin of 8.8% that must be offset through higher volumes
Fresh Del Monte Produce’s stock price of $41.17 implies a valuation ratio of 13.3x forward P/E. Check out our free in-depth research report to learn more about why FDP doesn’t pass our bar.
Chemed (CHE)
Trailing 12-Month Free Cash Flow Margin: 12.9%
With a unique business model combining end-of-life care and household services, Chemed (NYSE: CHE) operates two distinct businesses: VITAS, which provides hospice care for terminally ill patients, and Roto-Rooter, which offers plumbing and water restoration services.
Why Does CHE Fall Short?
- Sales trends were unexciting over the last five years as its 4% annual growth was below the typical healthcare company
- Earnings per share lagged its peers over the last five years as they only grew by 3.6% annually
- Diminishing returns on capital suggest its earlier profit pools are drying up
At $384.61 per share, Chemed trades at 16x forward P/E. Read our free research report to see why you should think twice about including CHE in your portfolio.
Flex (FLEX)
Trailing 12-Month Free Cash Flow Margin: 4.3%
Originally known as Flextronics until its 2016 rebranding, Flex (NASDAQ: FLEX) is a global manufacturing partner that designs, engineers, and builds products for companies across industries from medical devices to solar trackers.
Why Do We Think Twice About FLEX?
- Sales were flat over the last two years, indicating it’s failed to expand this cycle
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 2.8% for the last five years
- Eroding returns on capital suggest its historical profit centers are aging
Flex is trading at $81.90 per share, or 22.8x forward P/E. To fully understand why you should be careful with FLEX, check out our full research report (it’s free).
Stocks We Like More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week's Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.
