3 Cash-Producing Stocks We Find Risky

Generating cash is essential for any business, but not all cash-rich companies are great investments. Some produce plenty of cash but fail to allocate it effectively, leading to missed opportunities.

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 to avoid and some better opportunities instead.

Guess (GES)

Trailing 12-Month Free Cash Flow Margin: 2%

Flexing the iconic upside-down triangle logo with a question mark, Guess (NYSE:GES) is a global fashion brand known for its trendy clothing, accessories, and denim wear.

Why Are We Out on GES?

1. 8.7% annual revenue growth over the last five years was slower than its consumer discretionary peers
2. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
3. 7× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly

Guess’s stock price of $16.77 implies a valuation ratio of 10.7x forward P/E. If you’re considering GES for your portfolio, see our FREE research report to learn more.

Teledyne (TDY)

Trailing 12-Month Free Cash Flow Margin: 17.3%

Playing a role in mapping the ocean floor as we know it today, Teledyne (NYSE:TDY) offers digital imaging and instrumentation products for various industries.

Why Are We Wary of TDY?

1. Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
2. Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 4.5%
3. Below-average returns on capital indicate management struggled to find compelling investment opportunities

At $509.92 per share, Teledyne trades at 22.5x forward P/E. To fully understand why you should be careful with TDY, check out our full research report (it’s free for active Edge members).

Lindsay (LNN)

Trailing 12-Month Free Cash Flow Margin: 13.4%

A pioneer in the field of center pivot and lateral move irrigation, Lindsay (NYSE:LNN) provides a variety of proprietary water management and road infrastructure products and services.

Why Are We Cautious About LNN?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
2. Demand will likely be weak over the next 12 months as Wall Street expects flat revenue
3. Earnings per share lagged its peers over the last two years as they only grew by 1.7% annually

Lindsay is trading at $121.99 per share, or 20.2x forward P/E. Dive into our free research report to see why there are better opportunities than LNN.

Stocks We Like More

If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.

Don’t wait for the next volatility shock. Check 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 244% over the last five years (as of June 30, 2025).

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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.