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.
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 that don’t make the cut and some better opportunities instead.
Commerce (CMRC)
Trailing 12-Month Free Cash Flow Margin: 8.3%
As a founding member of the MACH Alliance advocating for modern tech standards, Commerce (NASDAQ:CMRC) provides a SaaS platform that enables businesses to build and manage online stores, connect with marketplaces, and integrate with point-of-sale systems.
Why Should You Sell CMRC?
- Average billings growth of 2.4% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
- Estimated sales growth of 4.1% for the next 12 months implies demand will slow from its two-year trend
- Low free cash flow margin of 8.3% for the last year gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
At $4.53 per share, Commerce trades at 1x forward price-to-sales. Read our free research report to see why you should think twice about including CMRC in your portfolio.
Boot Barn (BOOT)
Trailing 12-Month Free Cash Flow Margin: 2.7%
With a strong store presence in Texas, California, Florida, and Oklahoma, Boot Barn (NYSE:BOOT) is a western-inspired apparel and footwear retailer.
Why Is BOOT Not Exciting?
- Muted 9.3% annual revenue growth over the last three years shows its demand lagged behind its consumer retail peers
- Modest revenue base of $2.07 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- Widely-available products (and therefore stiff competition) result in an inferior gross margin of 37.5% that must be offset through higher volumes
Boot Barn’s stock price of $196.29 implies a valuation ratio of 25.5x forward P/E. To fully understand why you should be careful with BOOT, check out our full research report (it’s free for active Edge members).
Tyson Foods (TSN)
Trailing 12-Month Free Cash Flow Margin: 2.2%
Started as a simple trucking business, Tyson Foods (NYSE:TSN) is one of the world’s largest producers of chicken, beef, and pork.
Why Should You Dump TSN?
- Sales stagnated over the last three years and signal the need for new growth strategies
- Gross margin of 7.2% is below its competitors, leaving less money to invest in areas like marketing and production facilities
- Sales over the last three years were less profitable as its earnings per share fell by 22.1% annually while its revenue was flat
Tyson Foods is trading at $56.83 per share, or 14.8x forward P/E. Dive into our free research report to see why there are better opportunities than TSN.
High-Quality Stocks for All Market Conditions
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 5 Growth Stocks for this month. 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).
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