3 Cash-Producing Stocks Skating on Thin Ice

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.

Not all companies are created equal, and StockStory is here to surface the ones with real upside. That said, here are three cash-producing companies that don’t make the cut and some better opportunities instead.

Peloton (PTON)

Trailing 12-Month Free Cash Flow Margin: 9.4%

Started as a Kickstarter campaign, Peloton (NASDAQ: PTON) is a fitness technology company known for its at-home exercise equipment and interactive online workout classes.

Why Do We Steer Clear of PTON?

1. Sluggish trends in its connected fitness subscribers suggest customers aren’t adopting its solutions as quickly as the company hoped
2. Forecasted revenue decline of 4.1% for the upcoming 12 months implies demand will fall even further
3. Poor expense management has led to operating margin losses

Peloton’s stock price of $7.40 implies a valuation ratio of 8.8x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including PTON in your portfolio.

Reynolds (REYN)

Trailing 12-Month Free Cash Flow Margin: 8.6%

Best known for its aluminum foil, Reynolds (NASDAQ:REYN) is a household products company whose products focus on food storage, cooking, and waste.

Why Do We Think REYN Will Underperform?

1. Shrinking unit sales over the past two years imply it may need to invest in product improvements to get back on track
2. Projected sales decline of 1.4% for the next 12 months points to an even tougher demand environment ahead
3. Free cash flow margin dropped by 6.1 percentage points over the last year, implying the company became more capital intensive as competition picked up

At $22 per share, Reynolds trades at 13.4x forward P/E. To fully understand why you should be careful with REYN, check out our full research report (it’s free).

Stratasys (SSYS)

Trailing 12-Month Free Cash Flow Margin: 1.6%

Born from the Founder’s idea of making a toy frog with a glue gun, Stratasys (NASDAQ:SSYS) offers 3D printers and related materials, software, and services to many industries.

Why Do We Avoid SSYS?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 1.7% annually over the last five years
2. Earnings per share decreased by more than its revenue over the last five years, partly because it diluted shareholders
3. Cash-burning history makes us doubt the long-term viability of its business model

Stratasys is trading at $10.31 per share, or 32.9x forward P/E. Dive into our free research report to see why there are better opportunities than SSYS.

Stocks We Like More

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out 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 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free.