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. Keeping that in mind, here is one high-risk, high-reward company that could turn today’s losses into tomorrow’s gains and two that could run into serious trouble.
Two Industrials Stocks to Sell:
Plug Power (PLUG)
Trailing 12-Month Free Cash Flow Margin: -140%
Powering forklifts for Walmart’s distribution centers, Plug Power (NASDAQ:PLUG) provides hydrogen fuel cells used to power electric motors.
Why Is PLUG Risky?
- Sales tumbled by 8.7% annually over the last two years, showing market trends are working against its favor during this cycle
- Free cash flow margin shrank by 531.2 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Plug Power is trading at $1.48 per share, or 1.8x forward price-to-sales. To fully understand why you should be careful with PLUG, check out our full research report (it’s free).
Rivian (RIVN)
Trailing 12-Month Free Cash Flow Margin: -23.7%
The manufacturer of Amazon’s delivery trucks, Rivian (NASDAQ:RIVN) designs, manufactures, and sells electric vehicles and commercial delivery vans.
Why Is RIVN Not Exciting?
- Negative 49.3% gross margin means it loses money on every sale and must pivot or scale quickly to survive
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
At $11.70 per share, Rivian trades at 2.3x forward price-to-sales. Read our free research report to see why you should think twice about including RIVN in your portfolio.
One Industrials Stock to Buy:
Graham Corporation (GHM)
Trailing 12-Month Free Cash Flow Margin: -4.5%
Founded when its founder patented a unique design for a vacuum system used in the sugar refining process, Graham (NYSE:GHM) provides vacuum and heat transfer equipment for the energy, petrochemical, refining, and chemical sectors.
Why Is GHM a Top Pick?
- Demand is greater than supply as the company’s 21.7% average backlog growth over the past two years shows it’s securing new contracts and accumulating more orders than it can fulfill
- Operating margin improvement of 4.4 percentage points over the last five years demonstrates its ability to scale efficiently
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 145% annually, topping its revenue gains
Graham Corporation’s stock price of $49.08 implies a valuation ratio of 28.2x forward EV-to-EBITDA. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
When Trump unveiled his aggressive tariff plan in April 2024, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at 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-small-cap company Comfort Systems (+782% 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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