Running at a loss can be a red flag. Many of these businesses face mounting challenges as competition increases and funding becomes harder to secure.
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 with the potential to become an industry leader and two best left off your radar.
Two Stocks to Sell:
Domo (DOMO)
Trailing 12-Month GAAP Operating Margin: -16.5%
Founded by Josh James after selling his former business Omniture to Adobe, Domo (NASDAQ: DOMO) provides business intelligence software that allows managers to access and visualize critical business metrics in real-time, using their smartphones.
Why Are We Out on DOMO?
- Offerings couldn’t generate interest over the last year as its billings have averaged 2.4% declines
- Customer acquisition costs take a while to recoup, making it difficult to justify sales and marketing investments that could increase revenue
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
Domo is trading at $16 per share, or 2x forward price-to-sales. If you’re considering DOMO for your portfolio, see our FREE research report to learn more.
Bally's (BALY)
Trailing 12-Month GAAP Operating Margin: -8.3%
Headquartered in Providence, Rhode Island, Bally's Corporation (NYSE: BALY) is a diversified global casino-entertainment company that owns and manages casinos, resorts, and online gaming platforms.
Why Do We Pass on BALY?
- Annual revenue growth of 2.9% over the last two years was below our standards for the consumer discretionary sector
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
At $9.60 per share, Bally's trades at 1.8x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including BALY in your portfolio.
One Stock to Buy:
GitLab (GTLB)
Trailing 12-Month GAAP Operating Margin: -14.9%
Founded as an open-source project in 2011, GitLab (NASDAQ: GTLB) is a leading software development tools platform.
Why Is GTLB a Good Business?
- ARR growth averaged 31.7% over the last year, showing customers are willing to take multi-year bets on its offerings
- Prominent and differentiated software leads to a best-in-class gross margin of 88.6%
- Operating profits and efficiency rose over the last year as it benefited from some fixed cost leverage
GitLab’s stock price of $40.68 implies a valuation ratio of 6.7x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check 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-small-cap company Exlservice (+354% 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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