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. Keeping that in mind, here are three cash-burning companies that don’t make the cut and some better opportunities instead.
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 Do We Steer Clear of TRN?
- Annual sales declines of 2.2% for the past five years show its products and services struggled to connect with the market during this cycle
- Estimated sales for the next 12 months are flat and imply a softer demand environment
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 23.4 percentage points
Trinity’s stock price of $26.52 implies a valuation ratio of 14.7x forward P/E. Dive into our free research report to see why there are better opportunities than TRN.
Byrna (BYRN)
Trailing 12-Month Free Cash Flow Margin: -10%
Providing civilians with tools to disable, disarm, and deter would-be assailants, Byrna (NASDAQ: BYRN) is a provider of non-lethal weapons.
Why Do We Think Twice About BYRN?
- Historical operating margin losses point to an inefficient cost structure
- Cash-burning history makes us doubt the long-term viability of its business model
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
Byrna is trading at $18.28 per share, or 20.1x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why BYRN doesn’t pass our bar.
QuidelOrtho (QDEL)
Trailing 12-Month Free Cash Flow Margin: -5.6%
Born from the 2022 merger of Quidel and Ortho Clinical Diagnostics, QuidelOrtho (NASDAQ: QDEL) develops and manufactures diagnostic testing solutions for healthcare providers, from rapid point-of-care tests to complex laboratory instruments and systems.
Why Do We Avoid QDEL?
- Weak constant currency growth over the past two years indicates challenges in maintaining its market share
- Free cash flow margin shrank by 27.6 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
At $27.28 per share, QuidelOrtho trades at 12.9x forward P/E. To fully understand why you should be careful with QDEL, check out our full research report (it’s free for active Edge members).
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-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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