Companies that burn cash at a rapid pace can run into serious trouble if they fail to secure funding. Without a clear path to profitability, these businesses risk dilution, mounting debt, or even bankruptcy.
Not all companies are worth the risk, and that’s why we built StockStory - to help you spot the red flags. That said, here is one high-risk, high-reward company that could turn today’s losses into tomorrow’s gains and two that may struggle to stay afloat.
Two IndustrialsStocks to Sell:
Saia (SAIA)
Trailing 12-Month Free Cash Flow Margin: -6.2%
Pivoting its business model after realizing there was more success in delivering produce than selling it, Saia (NASDAQ: SAIA) is a provider of freight transportation solutions.
Why Is SAIA Not Exciting?
- Weak tons shipped over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
- Earnings per share have dipped by 4.9% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Free cash flow margin shrank by 15.7 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Saia’s stock price of $257.75 implies a valuation ratio of 16.4x forward P/E. Read our free research report to see why you should think twice about including SAIA in your portfolio.
AeroVironment (AVAV)
Trailing 12-Month Free Cash Flow Margin: -4.9%
Focused on the future of autonomous military combat, AeroVironment (NASDAQ: AVAV) specializes in advanced unmanned aircraft systems and electric vehicle charging solutions.
Why Are We Hesitant About AVAV?
- Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 7.5 percentage points
- 24.6 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
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
AeroVironment is trading at $196.50 per share, or 43.5x forward P/E. If you’re considering AVAV for your portfolio, see our FREE research report to learn more.
One Industrials Stock to Watch:
SmartRent (SMRT)
Trailing 12-Month Free Cash Flow Margin: -27.5%
Founded by an employee at a real estate rental company, SmartRent (NYSE: SMRT) provides smart home devices and software for multifamily residential properties, single-family rental homes, and student housing communities.
Why Does SMRT Stand Out?
- Ability to secure long-term commitments with customers is evident in its 28.5% average ARR growth over the past two years
- Earnings per share have massively outperformed its peers over the last two years, increasing by 43% annually
At $0.94 per share, SmartRent trades at 1.1x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free.
