3 Cash-Producing Stocks We Think Twice About

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 to steer clear of and a few better alternatives.

Hyster-Yale Materials Handling (HY)

Trailing 12-Month Free Cash Flow Margin: 1.4%

Playing a significant role in the development of the hydraulic lift truck, Hyster-Yale (NYSE:HY) designs, manufactures, and sells materials handling equipment to various sectors.

Why Do We Steer Clear of HY?

1. Sales tumbled by 2% annually over the last two years, showing market trends are working against its favor during this cycle
2. Sales are projected to tank by 6.4% over the next 12 months as its demand continues evaporating
3. Earnings per share fell by 2.6% annually over the last five years while its revenue grew, partly because it diluted shareholders

Hyster-Yale Materials Handling is trading at $34.83 per share, or 13.8x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why HY doesn’t pass our bar.

AECOM (ACM)

Trailing 12-Month Free Cash Flow Margin: 4.2%

Founded in 1990 when a group of engineers from five companies decided to merge, AECOM (NYSE:ACM) provides various infrastructure consulting services.

Why Does ACM Worry Us?

1. Demand cratered as it couldn’t win new orders over the past two years, leading to an average 2.7% decline in its backlog
2. Forecasted revenue decline of 5.4% for the upcoming 12 months implies demand will fall off a cliff
3. Poor expense management has led to an operating margin of 4.7% that is below the industry average

At $96.48 per share, AECOM trades at 18.3x forward P/E. Dive into our free research report to see why there are better opportunities than ACM.

Ziff Davis (ZD)

Trailing 12-Month Free Cash Flow Margin: 17.9%

Originally a pioneering technology publisher founded in 1927 that became famous for PC Magazine, Ziff Davis (NASDAQ:ZD) operates a portfolio of digital media brands and subscription services across technology, shopping, gaming, healthcare, and cybersecurity markets.

Why Should You Sell ZD?

1. Flat sales over the last five years suggest it must find different ways to grow during this cycle
2. Performance over the past five years shows each sale was less profitable, as its earnings per share fell by 2.2% annually
3. 14.9 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position

Ziff Davis’s stock price of $34.83 implies a valuation ratio of 5.2x forward P/E. To fully understand why you should be careful with ZD, check out our full research report (it’s free).

Stocks We Like More

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here in 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.