Unprofitable companies can burn through cash quickly, leaving investors exposed if they fail to turn things around. Without a clear path to profitability, these businesses risk running out of capital or relying on dilutive fundraising.
A lack of profits can lead to trouble, but StockStory helps you identify the businesses that stand a chance of making it through. That said, here is one unprofitable company investing heavily to secure market share and two that could struggle to survive.
Two Stocks to Sell:
Perma-Fix (PESI)
Trailing 12-Month GAAP Operating Margin: -25.1%
Tackling hazardous waste challenges since 1990, Perma-Fix (NASDAQ: PESI) provides environmental waste treatment services.
Why Is PESI Risky?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 7.3% annually over the last five years
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
At $10.33 per share, Perma-Fix trades at 95.1x forward EV-to-EBITDA. If you’re considering PESI for your portfolio, see our FREE research report to learn more.
RXO (RXO)
Trailing 12-Month GAAP Operating Margin: -1.3%
With access to millions of trucks, RXO (NYSE: RXO) offers full-truckload, less-than-truckload, and last-mile deliveries.
Why Do We Avoid RXO?
- Sales trends were unexciting over the last two years as its 6.2% annual growth was below the typical industrials company
- Incremental sales over the last four years were much less profitable as its earnings per share fell by 38.8% annually while its revenue grew
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
RXO’s stock price of $16.05 implies a valuation ratio of 56.8x forward P/E. Dive into our free research report to see why there are better opportunities than RXO.
One Stock to Watch:
Planet Labs (PL)
Trailing 12-Month GAAP Operating Margin: -41.7%
Pioneering the concept of "agile aerospace" with hundreds of small but powerful satellites, Planet Labs (NYSE: PL) operates the world's largest fleet of Earth observation satellites, capturing daily images of our planet to provide insights on deforestation, agriculture, and climate change.
Why Do We Like PL?
- Impressive 21.3% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 27% over the last two years outstripped its revenue performance
- Returns on capital are increasing as management’s prior bets are starting to bear fruit
Planet Labs is trading at $5.55 per share, or 5.8x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out 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. Find your next big winner with StockStory today. Find your next big winner with StockStory today
