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.
Not all companies are worth the risk, and that’s why we built StockStory - to help you spot the red flags. That said, here is one high-risk, high-reward company with the potential to scale into a market leader and two that may struggle to stay afloat.
Two Stocks to Sell:
Graphic Packaging Holding (GPK)
Trailing 12-Month Free Cash Flow Margin: -4.5%
Founded in 1991, Graphic Packaging (NYSE: GPK) is a provider of paper-based packaging solutions for a wide range of products.
Why Are We Out on GPK?
- Declining unit sales over the past two years suggest it might have to lower prices to accelerate growth
- Earnings per share have contracted by 10.4% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
- Free cash flow margin dropped by 8.9 percentage points over the last five years, implying the company became more capital intensive as competition picked up
At $20.71 per share, Graphic Packaging Holding trades at 9.5x forward P/E. To fully understand why you should be careful with GPK, check out our full research report (it’s free).
SolarEdge (SEDG)
Trailing 12-Month Free Cash Flow Margin: -10.3%
Established in 2006, SolarEdge (NASDAQ: SEDG) creates advanced systems to improve the efficiency of solar panels.
Why Should You Dump SEDG?
- Number of megawatts shipped has disappointed over the past two years, indicating weak demand for its offerings
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
SolarEdge is trading at $29.70 per share, or 1.3x forward price-to-sales. Check out our free in-depth research report to learn more about why SEDG doesn’t pass our bar.
One Stock to Watch:
Take-Two (TTWO)
Trailing 12-Month Free Cash Flow Margin: -1%
Best known for its Grand Theft Auto and NBA 2K franchises, Take Two (NASDAQ: TTWO) is one of the world’s largest video game publishers.
Why Does TTWO Catch Our Eye?
- Platform and reputation resonate with consumers, as seen in its above-market 15.2% annual sales growth over the last three years
- Demand for the next 12 months is expected to accelerate above its three-year trend as Wall Street forecasts robust revenue growth of 33.7%
- Excellent EBITDA margin of 14.3% highlights the efficiency of its business model
Take-Two’s stock price of $244.60 implies a valuation ratio of 31x forward EV/EBITDA. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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 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 Kadant (+351% 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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