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. Keeping that in mind, here are three cash-producing companies that don’t make the cut and some better opportunities instead.

Paylocity (PCTY)

Trailing 12-Month Free Cash Flow Margin: 21%

Founded by payroll software veteran Steve Sarowitz in 1997, Paylocity (NASDAQ:PCTY) is a provider of payroll and HR software for small and medium-sized enterprises.

Why Are We Wary of PCTY?

1. Net revenue retention rate of 92% shows it has a tough time retaining customers

2. Estimated sales growth of 8.6% for the next 12 months implies demand will slow from its three-year trend

3. Gross margin of 68.6% is below its competitors, leaving less money to invest in areas like marketing and R&D

At $190.31 per share, Paylocity trades at 6.7x forward price-to-sales. Dive into our free research report to see why there are better opportunities than PCTY .

Church & Dwight (CHD)

Trailing 12-Month Free Cash Flow Margin: 16%

Best known for its Arm & Hammer baking soda, Church & Dwight (NYSE:CHD) is a household and personal care products company with a vast portfolio that spans laundry detergent to toothbrushes to hair removal creams.

Why Does CHD Worry Us?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth

2. Estimated sales growth of 2.9% for the next 12 months implies demand will slow from its three-year trend

3. Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 4.8 percentage points

Church & Dwight’s stock price of $99.50 implies a valuation ratio of 26.6x forward price-to-earnings. Check out our free in-depth research report to learn more about why CHD doesn’t pass our bar .

MasterCraft (MCFT)

Trailing 12-Month Free Cash Flow Margin: 5.5%

Started by a waterskiing instructor, MasterCraft (NASDAQ:MCFT) specializes in designing, manufacturing, and selling sport boats.

Why Is MCFT Not Exciting?

1. Number of boats sold has disappointed over the past two years, indicating weak demand for its offerings

2. Estimated sales growth of 6.2% for the next 12 months is soft and implies weaker demand

3. Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable

MasterCraft is trading at $16.18 per share, or 14.1x forward price-to-earnings. Read our free research report to see why you should think twice about including MCFT in your portfolio, it’s free .