A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.

Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. Keeping that in mind, here are three cash-producing companies that don’t make the cut and some better opportunities instead.

Choice Hotels (CHH)

Trailing 12-Month Free Cash Flow Margin: 7.8%

With almost 100% of its properties under franchise agreements, Choice Hotels (NYSE: CHH) is a hotel franchisor known for its diverse brand portfolio including Comfort Inn, Quality Inn, and Clarion.

Why Do We Pass on CHH?

1. Revenue per room has disappointed over the past two years due to weaker trends in its daily rates and occupancy levels
2. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 8.3% for the last two years
3. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value

Choice Hotels is trading at $91.34 per share, or 12.7x forward P/E. Dive into our free research report to see why there are better opportunities than CHH.

Owens Corning (OC)

Trailing 12-Month Free Cash Flow Margin: 10.3%

Credited with the discovery of fiberglass, Owens Corning (NYSE: OC) supplies building and construction materials to the United States and international markets.

Why Is OC Risky?

1. Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
2. Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 13.6 percentage points
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

At $117.47 per share, Owens Corning trades at 11.5x forward P/E. If you’re considering OC for your portfolio, see our FREE research report to learn more.

Nordson (NDSN)

Trailing 12-Month Free Cash Flow Margin: 23.7%

Founded in 1954, Nordson Corporation (NASDAQ: NDSN) manufactures dispensing equipment and industrial adhesives, sealants and coatings.

Why Does NDSN Worry Us?

1. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
2. Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 2% annually
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

Nordson’s stock price of $235.09 implies a valuation ratio of 20.9x forward P/E. Dive into our free research report to see why there are better opportunities than NDSN.

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 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-small-cap company Exlservice (+354% 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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