Rapid spending isn’t always a sign of progress. Some cash-burning businesses fail to convert investments into meaningful competitive advantages, leaving them vulnerable.

Negative cash flow can lead to trouble, but StockStory helps you identify the businesses that stand a chance of making it through. Keeping that in mind, here are three cash-burning companies to avoid and some better opportunities instead.

GoPro (GPRO)

Trailing 12-Month Free Cash Flow Margin: -11.3%

Known for sponsoring extreme athletes, GoPro (NASDAQ: GPRO) is a camera company known for its POV videos and editing software.

Why Do We Steer Clear of GPRO?

1. Sales tumbled by 6.1% annually over the last five years, showing consumer trends are working against its favor
2. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
3. Short cash runway increases the probability of a capital raise that dilutes existing shareholders

GoPro is trading at $0.97 per share, or 15x forward P/E. To fully understand why you should be careful with GPRO, check out our full research report (it’s free).

WideOpenWest (WOW)

Trailing 12-Month Free Cash Flow Margin: -5.7%

Initially started in Denver as a cable television provider, WideOpenWest (NYSE: WOW) provides high-speed internet, cable, and telephone services to the Midwest and Southeast regions of the U.S.

Why Do We Avoid WOW?

1. Number of subscribers has disappointed over the past two years, indicating weak demand for its offerings
2. Cash burn makes us question whether it can achieve sustainable long-term growth
3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

At $3.80 per share, WideOpenWest trades at 1.2x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including WOW in your portfolio.

Sunrun (RUN)

Trailing 12-Month Free Cash Flow Margin: -35.2%

Helping homeowners use solar energy to power their homes, Sunrun (NASDAQ: RUN) provides residential solar electricity, specializing in panel installation and leasing services.

Why Are We Hesitant About RUN?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 7.1% annually over the last two years
2. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
3. Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution

Sunrun’s stock price of $10.41 implies a valuation ratio of 14.9x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why RUN doesn’t pass our bar.

High-Quality Stocks for All Market Conditions

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