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 that could turn today’s losses into long-term gains and two that may never reach the Promised Land.
Two Stocks to Sell:
nLIGHT (LASR)
Trailing 12-Month GAAP Operating Margin: -20.9%
Founded by a former CEO and Harvard-educated entrepreneur Scott Keeneyn, nLIGHT (NASDAQ: LASR) offers semiconductor and fiber lasers to the industrial, aerospace & defense, and medical sectors.
Why Do We Avoid LASR?
- Muted 2.6% annual revenue growth over the last five years shows its demand lagged behind its industrials peers
- 7.9 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
nLIGHT is trading at $30.51 per share, or 114.5x forward P/E. Check out our free in-depth research report to learn more about why LASR doesn’t pass our bar.
Ducommun (DCO)
Trailing 12-Month GAAP Operating Margin: -4.5%
California’s oldest company, Ducommun (NYSE: DCO) is a provider of engineering and manufacturing services for high-performance products primarily within the aerospace and defense industries.
Why Are We Hesitant About DCO?
- Backlog growth averaged a weak 4.8% over the past two years, suggesting it may need to tweak its product roadmap or go-to-market strategy
- Expenses have increased as a percentage of revenue over the last five years as its operating margin fell by 12.2 percentage points
- ROIC of 2.8% reflects management’s challenges in identifying attractive investment opportunities, and its shrinking returns suggest its past profit sources are losing steam
Ducommun’s stock price of $91.15 implies a valuation ratio of 22.1x forward P/E. Read our free research report to see why you should think twice about including DCO in your portfolio.
One Stock to Buy:
CrowdStrike (CRWD)
Trailing 12-Month GAAP Operating Margin: -8.7%
Known for detecting the massive SolarWinds hack in 2020 that compromised numerous government agencies, CrowdStrike (NASDAQ: CRWD) provides cloud-based cybersecurity solutions that protect endpoints, cloud workloads, identity, and data through its Falcon platform.
Why Should You Buy CRWD?
- Winning new contracts that can potentially increase in value as its billings growth has averaged 25% over the last year
- Projected revenue growth of 21.6% for the next 12 months suggests its momentum from the last two years will persist
- Software platform has product-market fit given the rapid recovery of its customer acquisition costs
At $538.50 per share, CrowdStrike trades at 25.1x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
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 9 Market-Beating Stocks. 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
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