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.
A lack of profits can lead to trouble, but StockStory helps you identify the businesses that stand a chance of making it through. That said, here is one unprofitable company investing heavily to secure market share and two that could struggle to survive.
Two Stocks to Sell:
Stratasys (SSYS)
Trailing 12-Month GAAP Operating Margin: -13%
Born from the Founder’s idea of making a toy frog with a glue gun, Stratasys (NASDAQ: SSYS) offers 3D printers and related materials, software, and services to many industries.
Why Is SSYS Risky?
- Annual sales declines of 1.7% for the past five years show its products and services struggled to connect with the market during this cycle
- Performance over the past five years was negatively impacted by new share issuances as its earnings per share dropped by 13.6% annually, worse than its revenue
- Cash burn makes us question whether it can achieve sustainable long-term growth
Stratasys’s stock price of $10.66 implies a valuation ratio of 35x forward P/E. Check out our free in-depth research report to learn more about why SSYS doesn’t pass our bar.
Applied Digital (APLD)
Trailing 12-Month GAAP Operating Margin: -40.4%
Pivoting from its origins in cryptocurrency mining to become a key player in the AI infrastructure boom, Applied Digital (NASDAQ: APLD) designs and operates specialized data centers that provide high-performance computing infrastructure for artificial intelligence and blockchain applications.
Why Are We Cautious About APLD?
- Historically negative EPS casts doubt for cautious investors and clouds its long-term earnings prospects
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
At $5.37 per share, Applied Digital trades at 9.4x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including APLD in your portfolio.
One Stock to Watch:
SmartRent (SMRT)
Trailing 12-Month GAAP Operating Margin: -44%
Founded by an employee at a real estate rental company, SmartRent (NYSE: SMRT) provides smart home devices and software for multifamily residential properties, single-family rental homes, and student housing communities.
Why Do We Like SMRT?
- Ability to secure long-term commitments with customers is evident in its 28.5% average ARR growth over the past two years
- Earnings per share grew by 42.8% annually over the last two years, massively outpacing its peers
SmartRent is trading at $0.85 per share, or 1x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking 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 176% over the last five years.
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.
