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 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:
Kura Sushi (KRUS)
Trailing 12-Month Free Cash Flow Margin: -11.5%
Known for its conveyor belt that transports dishes to diners, Kura Sushi (NASDAQ: KRUS) is a chain of sushi restaurants serving traditional Japanese fare with a touch of modernity and technology.
Why Is KRUS Not Exciting?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new diners into its restaurants
- Cash-burning history and the downward spiral in its margin profile make us wonder if it has a viable business model
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
Kura Sushi’s stock price of $64.61 implies a valuation ratio of 34.2x forward EV-to-EBITDA. If you’re considering KRUS for your portfolio, see our FREE research report to learn more.
AMC Entertainment (AMC)
Trailing 12-Month Free Cash Flow Margin: -6.2%
With a profile that was raised due to meme stock mania beginning in 2021, AMC Entertainment (NYSE: AMC) operates movie theaters primarily in the US and Europe.
Why Is AMC Risky?
- Sales trends were unexciting over the last five years as its 5.7% annual growth was below the typical consumer discretionary company
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
At $2.89 per share, AMC Entertainment trades at 2.3x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why AMC doesn’t pass our bar.
One Stock to Buy:
IonQ (IONQ)
Trailing 12-Month Free Cash Flow Margin: -296%
Founded by quantum physics pioneers from the University of Maryland and Duke University in 2015, IonQ (NYSE: IONQ) develops quantum computers that process information using trapped ions to solve complex computational problems beyond the capabilities of traditional computers.
Why Should You Buy IONQ?
- Market share has increased this cycle as its 78.9% annual revenue growth over the last two years was exceptional
- Adjusted operating margin expanded by 5,803.2 percentage points over the last five years as it scaled and became more efficient
- Negative free cash flow margin has improved over the last five years, showing the company is one step closer to financial self-sufficiency
IonQ is trading at $67.97 per share, or 125.8x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 6 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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