3 Cash-Producing Stocks We Find Risky

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 to avoid and some better opportunities instead.

WillScot Mobile Mini (WSC)

Trailing 12-Month Free Cash Flow Margin: 23%

Originally focusing on mobile offices for construction sites, WillScot (NASDAQ:WSC) provides ready-to-use temporary spaces, largely for longer-term lease.

Why Do We Think Twice About WSC?

1. Sales stagnated over the last two years and signal the need for new growth strategies
2. Estimated sales decline of 5.5% for the next 12 months implies an even more challenging demand environment
3. Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term

At $22.26 per share, WillScot Mobile Mini trades at 20x forward P/E. To fully understand why you should be careful with WSC, check out our full research report (it’s free).

Fortive (FTV)

Trailing 12-Month Free Cash Flow Margin: 22.4%

Taking its name from the Latin root of "strong", Fortive (NYSE:FTV) manufactures products and develops industrial software for numerous industries.

Why Should You Dump FTV?

1. Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
2. Flat earnings per share over the last five years lagged its peers
3. Below-average returns on capital indicate management struggled to find compelling investment opportunities, and its shrinking returns suggest its past profit sources are losing steam

Fortive is trading at $59.84 per share, or 20.4x forward P/E. Dive into our free research report to see why there are better opportunities than FTV.

AMN Healthcare Services (AMN)

Trailing 12-Month Free Cash Flow Margin: 8.2%

With a network of thousands of healthcare professionals ranging from nurses to physicians to executives, AMN Healthcare (NYSE:AMN) provides healthcare workforce solutions including temporary staffing, permanent placement, and technology platforms for hospitals and healthcare facilities across the United States.

Why Do We Think AMN Will Underperform?

1. Declining travelers on assignment over the past two years indicate demand is soft and that the company may need to revise its strategy
2. Earnings per share have dipped by 10.5% annually over the past five years, which is concerning because stock prices follow EPS over the long term
3. Diminishing returns on capital suggest its earlier profit pools are drying up

AMN Healthcare Services’s stock price of $20.30 implies a valuation ratio of 29.4x forward P/E. Read our free research report to see why you should think twice about including AMN in your portfolio.

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