3 Cash-Producing Stocks That Fall Short

A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.

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 to avoid and some better opportunities instead.

Five9 (FIVN)

Trailing 12-Month Free Cash Flow Margin: 11.3%

Taking its name from the "five nines" (99.999%) standard for optimal service reliability in telecommunications, Five9 (NASDAQ:FIVN) provides cloud-based software that enables businesses to run their contact centers with tools for customer service, sales, and marketing across multiple communication channels.

Why Does FIVN Fall Short?

1. Products, pricing, or go-to-market strategy may need some adjustments as its 10.5% average billings growth over the last year was weak
2. Estimated sales growth of 8.1% for the next 12 months implies demand will slow from its two-year trend
3. Sky-high servicing costs result in an inferior gross margin of 55.4% that must be offset through increased usage

At $18.82 per share, Five9 trades at 1.2x forward price-to-sales. If you’re considering FIVN for your portfolio, see our FREE research report to learn more.

Sprinklr (CXM)

Trailing 12-Month Free Cash Flow Margin: 14.4%

With a proprietary AI engine processing 450 million data points daily across 30+ digital channels, Sprinklr (NYSE:CXM) provides cloud-based software that helps large enterprises manage customer experiences across social, messaging, chat, and voice channels.

Why Do We Think CXM Will Underperform?

1. Offerings struggled to generate meaningful interest as its average billings growth of 6.9% over the last year did not impress
2. Estimated sales growth of 4.1% for the next 12 months implies demand will slow from its two-year trend
3. Static operating margin over the last year shows it couldn’t become more efficient

Sprinklr is trading at $6.80 per share, or 1.9x forward price-to-sales. To fully understand why you should be careful with CXM, check out our full research report (it’s free).

Luxfer (LXFR)

Trailing 12-Month Free Cash Flow Margin: 9.1%

With its magnesium alloys used in the construction of the famous Spirit of St. Louis aircraft, Luxfer (NYSE:LXFR) offers specialized materials, components, and gas containment devices to various industries.

Why Are We Out on LXFR?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 2.5% annually over the last two years
2. Projected sales decline of 4.2% over the next 12 months indicates demand will continue deteriorating
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

Luxfer’s stock price of $15.77 implies a valuation ratio of 13.5x forward P/E. Dive into our free research report to see why there are better opportunities than LXFR.

High-Quality Stocks for All Market Conditions

Check out the high-quality names we’ve flagged in 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 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.