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. That said, here are three cash-burning companies that don’t make the cut and some better opportunities instead.
Newmark (NMRK)
Trailing 12-Month Free Cash Flow Margin: -5.3%
Founded in 1929, Newmark (NASDAQ: NMRK) provides commercial real estate services, including leasing advisory, global corporate services, investment sales and capital markets, property and facilities management, valuation and advisory, and consulting.
Why Should You Sell NMRK?
- 4.9% annual revenue growth over the last five years was slower than its consumer discretionary peers
- Negative free cash flow raises questions about the return timeline for its investments
- ROIC of 3.1% reflects management’s challenges in identifying attractive investment opportunities
Newmark’s stock price of $12.25 implies a valuation ratio of 8.8x forward P/E. If you’re considering NMRK for your portfolio, see our FREE research report to learn more.
Fluence Energy (FLNC)
Trailing 12-Month Free Cash Flow Margin: -12.5%
Pioneering the use of lithium-ion batteries for grid storage, Fluence (NASDAQ: FLNC) helps store renewable energy sources with battery systems.
Why Does FLNC Worry Us?
- Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 6.4%
- Investments to defend its competitive moat have ramped up over the last five years as its free cash flow margin decreased by 12 percentage points
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
Fluence Energy is trading at $7.95 per share, or 19.5x forward P/E. Check out our free in-depth research report to learn more about why FLNC doesn’t pass our bar.
Vertex Pharmaceuticals (VRTX)
Trailing 12-Month Free Cash Flow Margin: -11.3%
Founded in 1989 with a mission to create medicines that treat the underlying causes of disease rather than just symptoms, Vertex Pharmaceuticals (NASDAQ: VRTX) develops and markets transformative medicines for serious diseases, with a focus on cystic fibrosis, sickle cell disease, and pain management.
Why Are We Hesitant About VRTX?
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 15.6% annually
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 58.8 percentage points
- Diminishing returns on capital suggest its earlier profit pools are drying up
At $475.27 per share, Vertex Pharmaceuticals trades at 25.5x forward P/E. To fully understand why you should be careful with VRTX, check out our full research report (it’s free).
High-Quality Stocks for All Market Conditions
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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 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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