3 Cash-Producing Stocks with Open Questions

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. That said, here are three cash-producing companies to avoid and some better opportunities instead.

Getty Images (GETY)

Trailing 12-Month Free Cash Flow Margin: 5.7%

With a vast library of over 562 million visual assets documenting everything from breaking news to iconic historical moments, Getty Images (NYSE:GETY) is a global visual content marketplace that licenses photos, videos, illustrations, and music to businesses, media outlets, and creative professionals.

Why Should You Dump GETY?

1. Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last two years
2. Free cash flow margin shrank by 7.3 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

At $1.77 per share, Getty Images trades at 2.5x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than GETY.

Coupang (CPNG)

Trailing 12-Month Free Cash Flow Margin: 3.3%

Founded in 2010 by Harvard Business School student Bom Kim, Coupang (NYSE:CPNG) is an e-commerce giant often referred to as the "Amazon of South Korea".

Why Does CPNG Fall Short?

1. Gross margin of 28% is below its competitors, leaving less money to invest in areas like marketing and R&D
2. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 4.4% for the last two years

Coupang’s stock price of $29.02 implies a valuation ratio of 29.9x forward EV/EBITDA. If you’re considering CPNG for your portfolio, see our FREE research report to learn more.

Interpublic Group (IPG)

Trailing 12-Month Free Cash Flow Margin: 11.6%

With a history dating back to 1902 and roots in the McCann-Erickson agency, Interpublic Group (NYSE:IPG) is a marketing and communications holding company that owns agencies specializing in advertising, media buying, public relations, and digital marketing services.

Why Are We Out on IPG?

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 3.2% over the next 12 months as its demand continues evaporating
3. 9.6 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position

Interpublic Group is trading at $24.70 per share, or 9.2x forward P/E. To fully understand why you should be careful with IPG, check out our full research report (it’s free).

High-Quality Stocks for All Market Conditions

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.

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