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.
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 are two high-risk, high-reward companies investing aggressively to carve out leadership positions and one that could run into serious trouble.
One stock to sell:
Solventum (SOLV)
Trailing 12-Month Free Cash Flow Margin: -1.4%
Founded in 1985, Solventum (NYSE: SOLV) develops, manufactures, and commercializes a portfolio of healthcare products and services addressing critical customer and therapeutic patient needs.
Why Are We Wary of SOLV?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Demand will likely be weak over the next 12 months as Wall Street expects flat revenue
- Free cash flow margin shrank by 18.2 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
At $88.23 per share, Solventum trades at 12.8x forward P/E. To fully understand why you should be careful with SOLV, check out our full research report (it’s free).
Two stocks to buy:
Upstart (UPST)
Trailing 12-Month Free Cash Flow Margin: -27.2%
Using over 2,500 data variables and trained on nearly 82 million repayment events, Upstart (NASDAQ: UPST) is an AI-powered lending platform that uses machine learning to help banks and credit unions more accurately assess borrower risk for personal loans, auto loans, and home equity lines of credit.
Why Is UPST a Good Business?
- Loan originations on its platform are soaring as they averaged 54.3% growth over the last year, enabling the company to collect more fees and expand into new markets like credit cards.
- Notable projected revenue growth of 30.4% for the next 12 months hints at market share gains
- Free cash flow is expected to be positive next year, showing the company is at a key inflection point
Upstart is trading at $23.77 per share, or 1.6x forward price-to-sales. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Nubank (NU)
Trailing 12-Month Free Cash Flow Margin: -6.8%
With well over one hundred million customers across Brazil, Mexico, and Colombia through its viral member-get-member referral program, Nubank (NYSE: NU) is a digital banking platform that offers financial services including spending, saving, investing, borrowing, and protection products to millions of customers across Latin America.
Why Will NU Outperform?
- Annual revenue growth of 41.1% over the past two years was outstanding, reflecting market share gains this cycle
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 48.7% over the last two years outstripped its revenue performance
- Stellar return on equity showcases management’s ability to surface highly profitable business ventures
Nubank’s stock price of $14.73 implies a valuation ratio of 15.7x forward P/E. 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
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
