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.
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.
Photronics (PLAB)
Trailing 12-Month Free Cash Flow Margin: 11.2%
Sporting a global footprint of facilities, Photronics (NASDAQ: PLAB) is a manufacturer of photomasks, templates used to transfer patterns onto semiconductor wafers.
Why Are We Hesitant About PLAB?
- Sales tumbled by 1.4% annually over the last two years, showing market trends are working against it during this cycle
- Estimated sales growth of 1.8% for the next 12 months is soft and implies weaker demand
- Gross margin of 35% is below its competitors, leaving less money to invest in areas like marketing and R&D
Photronics’s stock price of $30.72 implies a valuation ratio of 15.3x forward P/E. Read our free research report to see why you should think twice about including PLAB in your portfolio.
The New York Times (NYT)
Trailing 12-Month Free Cash Flow Margin: 18.7%
Founded in 1851, The New York Times (NYSE: NYT) is an American media organization known for its influential newspaper and expansive digital journalism platforms.
Why Should You Dump NYT?
- Performance surrounding its subscribers has lagged its peers
- Responsiveness to unforeseen market trends is restricted due to its substandard operating margin profitability
- Low returns on capital reflect management’s struggle to allocate funds effectively
The New York Times is trading at $74.21 per share, or 3.8x forward price-to-sales. Check out our free in-depth research report to learn more about why NYT doesn’t pass our bar.
Figs (FIGS)
Trailing 12-Month Free Cash Flow Margin: 5.9%
Rising to fame via TikTok and founded in 2013 by Heather Hasson and Trina Spear, Figs (NYSE: FIGS) is a healthcare apparel company known for its stylish approach to medical attire and uniforms.
Why Do We Avoid FIGS?
- Sluggish trends in its active customers suggest customers aren’t adopting its solutions as quickly as the company hoped
- Earnings per share have contracted by 5% annually over the last four years, a headwind for returns as stock prices often echo long-term EPS performance
- Poor free cash flow margin of 8.2% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
At $11.32 per share, Figs trades at 20.2x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than FIGS.
Stocks We Like More
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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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
