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 to leave off your radar.
Two Stocks to Sell:
Custom Truck One Source (CTOS)
Trailing 12-Month Free Cash Flow Margin: -8.3%
Inspired by a family gas station, Custom Truck One Source (NYSE: CTOS) is a distributor of trucks and heavy equipment.
Why Are We Hesitant About CTOS?
- 4.3% annual revenue growth over the last two years was slower than its industrials peers
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
- Negative free cash flow raises questions about the return timeline for its investments
At $10.61 per share, Custom Truck One Source trades at 61.4x forward P/E. To fully understand why you should be careful with CTOS, check out our full research report (it’s free).
Plug Power (PLUG)
Trailing 12-Month Free Cash Flow Margin: -88.3%
Powering forklifts for Walmart’s distribution centers, Plug Power (NASDAQ: PLUG) provides hydrogen fuel cells used to power electric motors.
Why Does PLUG Fall Short?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 3.9% annually over the last two years
- Cash burn makes us question whether it can achieve sustainable long-term growth
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Plug Power is trading at $2.25 per share, or 4x forward price-to-sales. Dive into our free research report to see why there are better opportunities than PLUG.
One Stock to Buy:
Viper Energy (VNOM)
Trailing 12-Month Free Cash Flow Margin: -58.7%
Operating a business model that requires no drilling rigs or production equipment of its own, Viper Energy (NASDAQ: VNOM) owns mineral and royalty interests in oil and gas properties, collecting revenue when operators extract resources from land.
What Makes VNOM Stand Out?
- Annual revenue growth of 36.8% over the past ten years was outstanding, reflecting market share gains this cycle
- Highly-profitable operating model results in strong unit economics and a best-in-class gross margin of 99.8%
- EBITDA profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
Viper Energy’s stock price of $41.74 implies a valuation ratio of 15.4x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
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.
