3 Cash-Producing Stocks That Concern Us

Generating cash is essential for any business, but not all cash-rich companies are great investments. Some produce plenty of cash but fail to allocate it effectively, leading to missed opportunities.

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.

Angi (ANGI)

Trailing 12-Month Free Cash Flow Margin: 8.9%

Created by IAC’s mergers of Angie’s List and HomeAdvisor, ANGI (NASDAQ: ANGI) operates the largest online marketplace for home services in the US.

Why Do We Think Twice About ANGI?

1. Struggled with new customer acquisition as its service requests averaged 23.3% declines
2. Sales are projected to tank by 13% over the next 12 months as its demand continues evaporating
3. Highly competitive market means it’s on the never-ending treadmill of sales and marketing spend

At $12.50 per share, Angi trades at 47.7x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including ANGI in your portfolio.

Tutor Perini (TPC)

Trailing 12-Month Free Cash Flow Margin: 10.8%

Known for constructing the Philadelphia Eagles’ Stadium, Tutor Perini (NYSE:TPC) is a civil and building construction company offering diversified general contracting and design-build services.

Why Should You Dump TPC?

1. Flat sales over the last five years suggest it must find different ways to grow during this cycle
2. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
3. Negative earnings profile makes it challenging to secure favorable financing terms from lenders

Tutor Perini’s stock price of $21.18 implies a valuation ratio of 12.6x forward price-to-earnings. Check out our free in-depth research report to learn more about why TPC doesn’t pass our bar.

Charles River Laboratories (CRL)

Trailing 12-Month Free Cash Flow Margin: 12.4%

Named after the Massachusetts river where it was founded in 1947, Charles River Laboratories (NYSE:CRL) provides non-clinical drug development services, research models, and manufacturing support to pharmaceutical and biotechnology companies.

Why Does CRL Give Us Pause?

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. Sales are projected to tank by 5.7% over the next 12 months as demand evaporates further
3. Waning returns on capital imply its previous profit engines are losing steam

Charles River Laboratories is trading at $109.50 per share, or 11.2x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than CRL.

Stocks We Like More

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

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Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.