Unprofitable companies face headwinds as they struggle to keep operating expenses under control. Some may be investing heavily, but the majority fail to convert spending into sustainable growth.
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 with the potential to become an industry leader and two best left off your radar.
Two Stocks to Sell:
Rocket Lab (RKLB)
Trailing 12-Month GAAP Operating Margin: -44.1%
Becoming the first private company in the Southern Hemisphere to reach space, Rocket Lab (NASDAQ: RKLB) offers rockets designed for launching small satellites.
Why Are We Wary of RKLB?
- Historically negative EPS casts doubt for cautious investors and clouds its long-term earnings prospects
- Cash burn makes us question whether it can achieve sustainable long-term growth
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
Rocket Lab is trading at $44.61 per share, or 33x forward price-to-sales. Dive into our free research report to see why there are better opportunities than RKLB.
Viatris (VTRS)
Trailing 12-Month GAAP Operating Margin: -18.4%
Created through the 2020 merger of Mylan and Pfizer's Upjohn division, Viatris (NASDAQ: VTRS) is a healthcare company that develops, manufactures, and distributes branded and generic medicines across more than 165 countries worldwide.
Why Is VTRS Risky?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 4.9% annually over the last two years
- Earnings per share fell by 12% annually over the last five years while its revenue grew, partly because it diluted shareholders
- Negative returns on capital show that some of its growth strategies have backfired, and its falling returns suggest its earlier profit pools are drying up
Viatris’s stock price of $10.50 implies a valuation ratio of 4.5x forward P/E. To fully understand why you should be careful with VTRS, check out our full research report (it’s free).
One Stock to Buy:
IonQ (IONQ)
Trailing 12-Month GAAP Operating Margin: -701%
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?
- Impressive 78.9% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Adjusted operating margin expanded by 5,803.2 percentage points over the last five years as it scaled and became more efficient
- Cash burn has become less severe over the last five years, showing the company is making some progress toward financial sustainability
At $41.99 per share, IonQ trades at 78.3x forward price-to-sales. Is now the right 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-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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