A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
Luckily for you, we built StockStory to help you separate the good from the bad. Keeping that in mind, here are three cash-producing companies that don’t make the cut and some better opportunities instead.
Mohawk Industries (MHK)
Trailing 12-Month Free Cash Flow Margin: 5.8%
Established in 1878, Mohawk Industries (NYSE: MHK) is a leading producer of floor-covering products for both residential and commercial applications.
Why Should You Sell MHK?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 2.5% for the last five years
- Free cash flow margin is expected to remain in place over the coming year
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
At $126.97 per share, Mohawk Industries trades at 13.3x forward P/E. To fully understand why you should be careful with MHK, check out our full research report (it’s free).
Rogers (ROG)
Trailing 12-Month Free Cash Flow Margin: 8.8%
With roots dating back to 1832, making it one of America's oldest continuously operating companies, Rogers (NYSE: ROG) designs and manufactures specialized engineered materials and components used in electric vehicles, telecommunications, renewable energy, and other high-performance applications.
Why Do We Think ROG Will Underperform?
- Sales tumbled by 5.5% annually over the last two years, showing market trends are working against its favor during this cycle
- Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 7.2 percentage points
- Earnings per share have contracted by 13.9% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance
Rogers’s stock price of $106.67 implies a valuation ratio of 34.3x forward P/E. Read our free research report to see why you should think twice about including ROG in your portfolio.
Dell (DELL)
Trailing 12-Month Free Cash Flow Margin: 4.3%
Founded by Michael Dell in his University of Texas dorm room in 1984 with just $1,000, Dell Technologies (NYSE: DELL) provides hardware, software, and services that help organizations build their IT infrastructure, manage cloud environments, and enable digital transformation.
Why Does DELL Give Us Pause?
- Average ARR growth of 3.6% has disappointed, suggesting it’s had a hard time winning long-term deals and renewals
- Earnings growth underperformed the sector average over the last five years as its EPS grew by just 4.6% annually
- Free cash flow margin dropped by 6.5 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Dell is trading at $122.32 per share, or 10.3x forward P/E. If you’re considering DELL for your portfolio, see our FREE research report to learn more.
Stocks We Like More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in 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 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.
