3 Cash-Producing Stocks Walking a Fine Line

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

MasterCraft (MCFT)

Trailing 12-Month Free Cash Flow Margin: 8.9%

Started by a waterskiing instructor, MasterCraft (NASDAQ:MCFT) specializes in designing, manufacturing, and selling sport boats.

Why Do We Steer Clear of MCFT?

1. Number of boats sold has disappointed over the past two years, indicating weak demand for its offerings
2. Free cash flow margin is forecasted to shrink by 2 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

MasterCraft is trading at $25.21 per share, or 15.6x forward P/E. Dive into our free research report to see why there are better opportunities than MCFT.

Knowles (KN)

Trailing 12-Month Free Cash Flow Margin: 19%

With roots dating back to 1946 and a focus on components that must perform flawlessly in critical situations, Knowles (NYSE:KN) designs and manufactures specialized electronic components like high-performance capacitors, microphones, and speakers for medical technology, defense, and industrial applications.

Why Do We Avoid KN?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 4.9% annually over the last five years
2. Smaller revenue base of $593.2 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

At $26.99 per share, Knowles trades at 20x forward P/E. To fully understand why you should be careful with KN, check out our full research report (it’s free).

Privia Health (PRVA)

Trailing 12-Month Free Cash Flow Margin: 5.4%

Operating in 13 states and the District of Columbia with over 4,300 providers serving more than 4.8 million patients, Privia Health (NASDAQ:PRVA) is a technology-driven company that helps physicians optimize their practices, improve patient experiences, and transition to value-based care models.

Why Are We Cautious About PRVA?

1. Subscale operations are evident in its revenue base of $2.04 billion, meaning it has fewer distribution channels than its larger rivals
2. Poor free cash flow margin of 4.3% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
3. Push for growth has led to negative returns on capital, signaling value destruction

Privia Health’s stock price of $22.00 implies a valuation ratio of 22.4x forward P/E. Check out our free in-depth research report to learn more about why PRVA doesn’t pass our bar.

Stocks We Like More

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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.