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 to steer clear of and a few better alternatives.

First Advantage (FA)

Trailing 12-Month Free Cash Flow Margin: 8.9%

Processing over 200 million screens annually across more than 200 countries and territories, First Advantage (NASDAQ: FA) provides employment background screening, identity verification, and compliance solutions to help companies manage hiring risks.

Why Are We Cautious About FA?

1. Flat earnings per share over the last four years lagged its peers
2. Free cash flow margin dropped by 8.6 percentage points over the last five years, implying the company became more capital intensive as competition picked up
3. Low returns on capital reflect management’s struggle to allocate funds effectively, and its falling returns suggest its earlier profit pools are drying up

At $11.18 per share, First Advantage trades at 9.8x forward P/E. To fully understand why you should be careful with FA, check out our full research report (it’s free).

Zebra (ZBRA)

Trailing 12-Month Free Cash Flow Margin: 15.4%

Taking its name from the black and white stripes of barcodes, Zebra Technologies (NASDAQ: ZBRA) provides barcode scanners, mobile computers, RFID systems, and other data capture technologies that help businesses track assets and optimize operations.

Why Does ZBRA Worry Us?

1. Sales trends were unexciting over the last five years as its 3.9% annual growth was below the typical business services company
2. Earnings growth over the last five years fell short of the peer group average as its EPS only increased by 4.3% annually
3. Waning returns on capital imply its previous profit engines are losing steam

Zebra is trading at $207.87 per share, or 11.6x forward P/E. Dive into our free research report to see why there are better opportunities than ZBRA.

Excelerate Energy (EE)

Trailing 12-Month Free Cash Flow Margin: 24.3%

Operating specialized vessels that can deliver up to 1.2 billion cubic feet of natural gas per day, Excelerate Energy (NYSE: EE) provides liquified natural gas regasification services using floating vessels that convert LNG back into natural gas.

Why Does EE Give Us Pause?

1. Subscale operations are evident in its revenue base of $1.23 billion, meaning it has fewer distribution channels than its larger rivals
2. Costly operations and weak unit economics result in an inferior gross margin of 30.1% that must be offset through higher production volumes

Excelerate Energy’s stock price of $32.19 implies a valuation ratio of 14.4x forward P/E. Check out our free in-depth research report to learn more about why EE doesn’t pass our bar.

High-Quality Stocks for All Market Conditions

ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum — both boxes checked at the same time.

Find out which stocks our AI platform is flagging this week. See this week's Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.

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.