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.

Finding the right unprofitable companies is difficult, which is why we started StockStory - to help you navigate the market. 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:

Jack in the Box (JACK)

Trailing 12-Month GAAP Operating Margin: -8.8%

Delighting customers since its inception in 1951, Jack in the Box (NASDAQ: JACK) is a distinctive fast-food chain known for its bold flavors, innovative menu items, and quirky marketing.

Why Are We Out on JACK?

1. Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new restaurants
2. Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 24.2 percentage points
3. 10× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings

Jack in the Box is trading at $22.08 per share, or 4.2x forward P/E. Read our free research report to see why you should think twice about including JACK in your portfolio.

Plug Power (PLUG)

Trailing 12-Month GAAP Operating Margin: -302%

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

Why Is PLUG Risky?

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. 531.2 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
3. Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution

Plug Power’s stock price of $1.77 implies a valuation ratio of 2.1x forward price-to-sales. To fully understand why you should be careful with PLUG, check out our full research report (it’s free).

One Stock to Watch:

Arlo Technologies (ARLO)

Trailing 12-Month GAAP Operating Margin: -4.7%

Originally spun off from networking equipment maker Netgear in 2018, Arlo Technologies (NYSE: ARLO) provides cloud-based smart security devices and subscription services that help consumers and businesses monitor and protect their homes, properties, and loved ones.

Why Is ARLO on Our Radar?

1. Operating margin expanded by 15.4 percentage points over the last five years as it scaled and became more efficient
2. Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 193% outpaced its revenue gains
3. Free cash flow margin grew by 19.7 percentage points over the last five years, giving the company more chips to play with

At $16 per share, Arlo Technologies trades at 25.7x forward P/E. Is now the right time to buy? See for yourself in our comprehensive 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 5 Strong Momentum 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

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