3 Cash-Producing Stocks We're Skeptical Of

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. That said, here are three cash-producing companies that don’t make the cut and some better opportunities instead.

Williams-Sonoma (WSM)

Trailing 12-Month Free Cash Flow Margin: 12.7%

Started in 1956 as a store specializing in French cookware, Williams-Sonoma (NYSE:WSM) is a specialty retailer of higher-end kitchenware, home goods, and furniture.

Why Is WSM Not Exciting?

1. Store closures and poor same-store sales reveal weak demand and a push toward operational efficiency
2. Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
3. Free cash flow margin shrank by 5.3 percentage points over the last year, suggesting the company is consuming more capital to stay competitive

At $201 per share, Williams-Sonoma trades at 23.5x forward P/E. To fully understand why you should be careful with WSM, check out our full research report (it’s free).

Pilgrim's Pride (PPC)

Trailing 12-Month Free Cash Flow Margin: 6.1%

Offering everything from pre-marinated to frozen chicken, Pilgrim’s Pride (NASDAQ:PPC) produces, processes, and distributes chicken products to retailers and food service customers.

Why Are We Hesitant About PPC?

1. Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 2.8% over the last three years was below our standards for the consumer staples sector
2. Estimated sales growth of 1.3% for the next 12 months is soft and implies weaker demand
3. Gross margin of 11.8% is an output of its commoditized products

Pilgrim's Pride is trading at $49.32 per share, or 10.5x forward P/E. Dive into our free research report to see why there are better opportunities than PPC.

Premier (PINC)

Trailing 12-Month Free Cash Flow Margin: 29.6%

Operating one of the largest healthcare group purchasing organizations in the United States with over 4,350 hospital members, Premier (NASDAQ:PINC) is a technology-driven healthcare improvement company that helps hospitals, health systems, and other providers reduce costs and improve clinical outcomes.

Why Should You Dump PINC?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 9.3% annually over the last two years
2. Projected sales decline of 10.6% over the next 12 months indicates demand will continue deteriorating
3. Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term

Premier’s stock price of $22.11 implies a valuation ratio of 16.4x forward P/E. If you’re considering PINC for your portfolio, see our FREE research report to learn more.

Stocks We Like More

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Take advantage of the rebound by checking out our Top 5 Growth Stocks for this month. 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).

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