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.

Just because a company is spending heavily doesn’t mean it’s on the right track, and StockStory is here to separate the winners from the losers. Keeping that in mind, 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 Industrials Stocks to Sell:

Plug Power (PLUG)

Trailing 12-Month Free Cash Flow Margin: -140%

Powering forklifts for Walmart’s distribution centers, Plug Power (NASDAQ: PLUG) provides hydrogen fuel cells used to power electric motors.

Why Do We Steer Clear of PLUG?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 8.7% annually over the last two years
2. Free cash flow margin dropped by 531.2 percentage points over the last five years, implying the company became more capital intensive as competition picked up
3. Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders

At $0.78 per share, Plug Power trades at 0.9x forward price-to-sales. Read our free research report to see why you should think twice about including PLUG in your portfolio.

Meritage Homes (MTH)

Trailing 12-Month Free Cash Flow Margin: -6%

Originally founded in 1985 in Arizona as Monterey Homes, Meritage Homes (NYSE: MTH) is a homebuilder specializing in designing and constructing energy-efficient and single-family homes in the US.

Why Are We Out on MTH?

1. Demand cratered as it couldn’t win new orders over the past two years, leading to an average 38.2% decline in its backlog
2. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 15.7 percentage points
3. Diminishing returns on capital suggest its earlier profit pools are drying up

Meritage Homes’s stock price of $64.22 implies a valuation ratio of 7.2x forward P/E. If you’re considering MTH for your portfolio, see our FREE research report to learn more.

One Industrials Stock to Buy:

FTAI Aviation (FTAI)

Trailing 12-Month Free Cash Flow Margin: -79.1%

With a focus on the CFM56 engine that powers Boeing and Airbus’s planes, FTAI Aviation (NASDAQ: FTAI) sells, leases, maintains, and repairs aircraft engines.

Why Is FTAI a Top Pick?

1. Annual revenue growth of 44.9% over the last two years was superb and indicates its market share increased during this cycle
2. Additional sales over the last two years increased its profitability as the 73.8% annual growth in its earnings per share outpaced its revenue
3. Cash-burning tendencies have improved over the last five years, showing it could become financially independent one day

FTAI Aviation is trading at $114.20 per share, or 19.9x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out 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 176% over the last five years.

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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.