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. That said, here are three cash-producing companies to steer clear of and a few better alternatives.

D.R. Horton (DHI)

Trailing 12-Month Free Cash Flow Margin: 10.4%

One of the largest homebuilding companies in the U.S., D.R. Horton (NYSE: DHI) builds a variety of new construction homes across multiple markets.

Why Are We Out on DHI?

1. Product roadmap and go-to-market strategy need to be reconsidered as its backlog has averaged 13.9% declines over the past two years
2. Earnings per share have contracted by 11% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
3. Eroding returns on capital suggest its historical profit centers are aging

At $155.46 per share, D.R. Horton trades at 14.6x forward P/E. To fully understand why you should be careful with DHI, check out our full research report (it’s free).

Bio-Techne (TECH)

Trailing 12-Month Free Cash Flow Margin: 18.4%

With a catalog of hundreds of thousands of specialized biological products used in laboratories worldwide, Bio-Techne (NASDAQ: TECH) develops and manufactures specialized reagents, instruments, and services that help researchers study biological processes and enable diagnostic testing and cell therapy development.

Why Should You Dump TECH?

1. Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
2. Modest revenue base of $1.22 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
3. Free cash flow margin dropped by 11.6 percentage points over the last five years, implying the company became more capital intensive as competition picked up

Bio-Techne is trading at $69.65 per share, or 35.4x forward P/E. Dive into our free research report to see why there are better opportunities than TECH.

10x Genomics (TXG)

Trailing 12-Month Free Cash Flow Margin: 12.7%

Founded in 2012 by scientists seeking to overcome limitations in traditional biological research methods, 10x Genomics (NASDAQ: TXG) develops instruments, consumables, and software that enable researchers to analyze biological systems at single-cell resolution and spatial context.

Why Do We Think Twice About TXG?

1. Muted 4.2% annual revenue growth over the last two years shows its demand lagged behind its healthcare peers
2. Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
3. Negative returns on capital show that some of its growth strategies have backfired

10x Genomics’s stock price of $23.08 implies a valuation ratio of 4.7x forward price-to-sales. If you’re considering TXG for your portfolio, see our FREE research report to learn more.

High-Quality Stocks for All Market Conditions

If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.

Don’t wait for the next volatility shock. Check out our Top 9 Market-Beating Stocks. 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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.