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. Keeping that in mind, here are three cash-producing companies to steer clear of and a few better alternatives.
Asana (ASAN)
Trailing 12-Month Free Cash Flow Margin: 2.3%
Founded in 2008 by Facebook’s co-founder Dustin Moskovitz, Asana (NYSE:ASAN) is a cloud-based project management software, where you can plan and assign tasks to employees and monitor and discuss progress of work.
Why Are We Cautious About ASAN?
- Customers had second thoughts about committing to its platform over the last year as its average billings growth of 4.3% underwhelmed
- Net revenue retention rate of 96.3% shows it has a tough time retaining customers
- Complex implementation process for enterprise clients means customers take longer to ramp up, as seen in its extended payback periods
At $14.87 per share, Asana trades at 4.3x forward price-to-sales. Dive into our free research report to see why there are better opportunities than ASAN.
Hub Group (HUBG)
Trailing 12-Month Free Cash Flow Margin: 3.7%
Started with $10,000, Hub Group (NASDAQ:HUBG) is a provider of intermodal, truck brokerage, and logistics services, facilitating transportation solutions for businesses worldwide.
Why Is HUBG Risky?
- Declining unit sales over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
- Performance over the past two years shows each sale was less profitable as its earnings per share dropped by 41.4% annually, worse than its revenue
- Waning returns on capital imply its previous profit engines are losing steam
Hub Group is trading at $36 per share, or 16.1x forward P/E. If you’re considering HUBG for your portfolio, see our FREE research report to learn more.
THOR Industries (THO)
Trailing 12-Month Free Cash Flow Margin: 5.8%
Created through the acquisition and merger of various RV manufacturers, THOR Industries manufactures and sells a range of recreational vehicles, including motorhomes and travel trailers, catering to consumers seeking the freedom and comfort of the RV lifestyle.
Why Do We Avoid THO?
- Annual sales declines of 11.4% for the past two years show its products and services struggled to connect with the market during this cycle
- Earnings per share have contracted by 36.7% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
- Eroding returns on capital suggest its historical profit centers are aging
THOR Industries’s stock price of $93.15 implies a valuation ratio of 19.1x forward P/E. Read our free research report to see why you should think twice about including THO in your portfolio.
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 5 Growth Stocks for this month. 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. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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