While some companies burn cash to fuel expansion, others struggle to turn spending into sustainable growth. A high cash burn rate without a strong balance sheet can leave investors exposed to significant downside.

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.

Magnachip (MX)

Trailing 12-Month Free Cash Flow Margin: -22.3%

With its technology found in common consumer electronics such as TVs and smartphones, Magnachip Semiconductor (NYSE: MX) is a provider of analog and mixed-signal semiconductors.

Why Do We Pass on MX?

1. Sales tumbled by 16.2% annually over the last five years, showing market trends are working against its favor during this cycle
2. Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
3. Increased cash burn over the last five years raises questions about the return timeline for its investments

At $3.18 per share, Magnachip trades at 0.6x forward price-to-sales. Check out our free in-depth research report to learn more about why MX doesn’t pass our bar.

Trinity (TRN)

Trailing 12-Month Free Cash Flow Margin: -18.2%

Operating under the trade name TrinityRail, Trinity (NYSE: TRN) is a provider of railcar products and services in North America.

Why Are We Out on TRN?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 2.2% annually over the last five years
2. Sales are projected to tank by 3.5% over the next 12 months as its demand continues evaporating
3. 23.4 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position

Trinity is trading at $27.41 per share, or 10.3x forward P/E. Read our free research report to see why you should think twice about including TRN in your portfolio.

Goodyear (GT)

Trailing 12-Month Free Cash Flow Margin: -1.9%

With its iconic blimp floating above major sporting events since 1925, Goodyear (NYSE: GT) is one of the world's largest tire manufacturers, producing and selling tires for automobiles, trucks, aircraft, and other vehicles, along with related services.

Why Should You Sell GT?

1. Declining unit sales over the past two years imply it may need to invest in improvements to get back on track
2. Free cash flow margin dropped by 5.2 percentage points over the last five years, implying the company became more capital intensive as competition picked up
3. Underwhelming 4.9% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its shrinking returns suggest its past profit sources are losing steam

Goodyear’s stock price of $9.37 implies a valuation ratio of 7.8x forward P/E. If you’re considering GT for your portfolio, see our FREE research report to learn more.

Stocks We Like More

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in 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 244% over the last five years (as of June 30, 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.