3 Cash-Producing Stocks We Keep Off Our Radar

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.

Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. Keeping that in mind, here are three cash-producing companies to avoid and some better opportunities instead.

Semrush (SEMR)

Trailing 12-Month Free Cash Flow Margin: 9.7%

Born from the need to make sense of the complex digital marketing landscape, Semrush (NYSE:SEMR) is a software-as-a-service platform that helps companies improve their online visibility, analyze digital marketing efforts, and optimize content across search engines and social media.

Why Does SEMR Give Us Pause?

1. Customers generally do not adopt complementary products as its 106% net revenue retention rate lags behind the industry standard
2. Operating margin fell by 4.3 percentage points over the last year as it prioritized growth over profits
3. Poor free cash flow margin of 9.7% for the last year limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends

Semrush’s stock price of $11.81 implies a valuation ratio of 3.6x forward price-to-sales. Check out our free in-depth research report to learn more about why SEMR doesn’t pass our bar.

Constellation Brands (STZ)

Trailing 12-Month Free Cash Flow Margin: 18.8%

With a presence in more than 100 countries, Constellation Brands (NYSE:STZ) is a globally renowned producer and marketer of beer, wine, and spirits.

Why Are We Hesitant About STZ?

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. Forecasted revenue decline of 3.1% for the upcoming 12 months implies demand will fall off a cliff
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

Constellation Brands is trading at $155.24 per share, or 13.3x forward P/E. Read our free research report to see why you should think twice about including STZ in your portfolio.

Planet Fitness (PLNT)

Trailing 12-Month Free Cash Flow Margin: 19.2%

Founded by two brothers who purchased a struggling gym, Planet Fitness (NYSE:PLNT) is a gym franchise that caters to casual fitness users by providing a friendly and inclusive atmosphere.

Why Do We Think PLNT Will Underperform?

1. Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its stores
2. Free cash flow margin is forecasted to shrink by 2.6 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

At $80.17 per share, Planet Fitness trades at 24.3x forward P/E. If you’re considering PLNT for your portfolio, see our FREE research report to learn more.

Stocks We Like More

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The names generating the next wave of massive growth are right here in our Top 9 Market-Beating Stocks. 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.