Unprofitable companies face headwinds as they struggle to keep operating expenses under control. Some may be investing heavily, but the majority fail to convert spending into sustainable growth.

Unprofitable companies face an uphill battle, but not all are created equal. Luckily for you, StockStory is here to separate the promising ones from the weak. That said, here are three unprofitable companiesthat don’t make the cut and some better opportunities instead.

Sweetgreen (SG)

Trailing 12-Month GAAP Operating Margin: -17.9%

Founded in 2007 by three Georgetown University alum, Sweetgreen (NYSE: SG) is a casual quick service chain known for its healthy salads and bowls.

Why Should You Dump SG?

1. Disappointing same-store sales over the past two years show customers aren’t responding well to its menu offerings and dining experience
2. 10.8 percentage point decline in its free cash flow margin over the last year reflects the company’s increased investments to defend its market position
3. Short cash runway increases the probability of a capital raise that dilutes existing shareholders

Sweetgreen’s stock price of $7.18 implies a valuation ratio of 1.2x forward price-to-sales. Dive into our free research report to see why there are better opportunities than SG.

Cable One (CABO)

Trailing 12-Month GAAP Operating Margin: -12.9%

Founded in 1986, Cable One (NYSE: CABO) provides high-speed internet, cable television, and telephone services, primarily in smaller markets across the United States.

Why Do We Think CABO Will Underperform?

1. Performance surrounding its residential data subscribers has lagged its peers
2. Free cash flow margin is on track to jump by 1.3 percentage points next year, meaning the company will have more resources to pursue growth initiatives, repurchase shares, or pay dividends
3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

Cable One is trading at $132.12 per share, or 3.4x forward P/E. Check out our free in-depth research report to learn more about why CABO doesn’t pass our bar.

Sphere Entertainment (SPHR)

Trailing 12-Month GAAP Operating Margin: -28.2%

Famous for its viral Las Vegas Sphere venue, Sphere Entertainment (NYSE: SPHR) hosts live entertainment events and distributes content across various media platforms.

Why Do We Avoid SPHR?

1. Annual revenue growth of 8.5% over the last five years was below our standards for the consumer discretionary sector
2. Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
3. Rising returns on capital show management is making relatively better investments

At $88.55 per share, Sphere Entertainment trades at 13.8x forward EV-to-EBITDA. If you’re considering SPHR for your portfolio, see our FREE research report to learn more.

Stocks We Like More

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Growth Stocks for this month. 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.