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.
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.
Grand Canyon Education (LOPE)
Trailing 12-Month Free Cash Flow Margin: 22.2%
Founded in 1949, Grand Canyon Education (NASDAQ: LOPE) is an educational services provider known for its operation at Grand Canyon University.
Why Do We Avoid LOPE?
- Sluggish trends in its students suggest customers aren’t adopting its solutions as quickly as the company hoped
- Earnings growth underperformed the sector average over the last five years as its EPS grew by just 7.4% annually
- Free cash flow margin is expected to increase by 1.1 percentage points next year, suggesting the company will have more capital to invest or return to shareholders
Grand Canyon Education’s stock price of $153.41 implies a valuation ratio of 16.2x forward P/E. To fully understand why you should be careful with LOPE, check out our full research report (it’s free for active Edge members).
General Dynamics (GD)
Trailing 12-Month Free Cash Flow Margin: 9.3%
Creator of the famous M1 Abrahms tank, General Dynamics (NYSE: GD) develops aerospace, marine systems, combat systems, and information technology products.
Why Does GD Fall Short?
- Sales pipeline suggests its future revenue growth may not meet our standards as its average backlog growth of 3.4% for the past two years was weak
- Estimated sales growth of 4.1% for the next 12 months implies demand will slow from its two-year trend
- 1.8 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
General Dynamics is trading at $337.47 per share, or 20.8x forward P/E. Dive into our free research report to see why there are better opportunities than GD.
Corning (GLW)
Trailing 12-Month Free Cash Flow Margin: 8.8%
Supplying windows for some of the United States’s earliest spacecraft, Corning (NYSE: GLW) provides glass and other electronic components for the consumer electronics, telecommunications, automotive, and healthcare industries.
Why Does GLW Worry Us?
- Annual sales growth of 6.7% over the last two years lagged behind its industrials peers as its large revenue base made it difficult to generate incremental demand
- Free cash flow margin dropped by 4.4 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Below-average returns on capital indicate management struggled to find compelling investment opportunities, and its decreasing returns suggest its historical profit centers are aging
At $85.62 per share, Corning trades at 29x forward P/E. If you’re considering GLW for your portfolio, see our FREE research report to learn more.
Stocks We Like More
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).
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-small-cap company Comfort Systems (+782% 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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