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.
Global Business Travel (GBTG)
Trailing 12-Month Free Cash Flow Margin: 6.9%
Holding close ties to American Express, Global Business Travel (NYSE:GBTG) is a comprehensive travel and expense management services provider to corporations worldwide.
Why Are We Wary of GBTG?
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Estimated sales growth of 1.9% for the next 12 months implies demand will slow from its three-year trend
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Gross margin of 60.8% reflects its relatively high servicing costs
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Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
Global Business Travel is trading at $6.50 per share, or 1.3x forward price-to-sales. If you’re considering GBTG for your portfolio, see our FREE research report to learn more .
Applied Industrial (AIT)
Trailing 12-Month Free Cash Flow Margin: 9.8%
Formerly called The Ohio Ball Bearing Company, Applied Industrial (NYSE:AIT) distributes industrial products–everything from power tools to industrial valves–and services to a wide variety of industries.
Why Do We Think Twice About AIT?
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Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
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Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 5%
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Free cash flow margin has stayed in place over the last five years
At $229.13 per share, Applied Industrial trades at 21.4x forward P/E. Dive into our free research report to see why there are better opportunities than AIT .
Ziff Davis (ZD)
Trailing 12-Month Free Cash Flow Margin: 16.3%
Originally a pioneering technology publisher founded in 1927 that became famous for PC Magazine, Ziff Davis (NASDAQ:ZD) operates a portfolio of digital media brands and subscription services across technology, shopping, gaming, healthcare, and cybersecurity markets.
Why Is ZD Risky?
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Sales were flat over the last five years, indicating it’s failed to expand this cycle
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Sales over the last five years were less profitable as its earnings per share fell by 1.6% annually while its revenue was flat
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Free cash flow margin dropped by 17.6 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Ziff Davis’s stock price of $32.81 implies a valuation ratio of 4.6x forward P/E. Read our free research report to see why you should think twice about including ZD in your portfolio, it’s free .
Stocks We Like More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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 .