Unprofitable companies can burn through cash quickly, leaving investors exposed if they fail to turn things around. Without a clear path to profitability, these businesses risk running out of capital or relying on dilutive fundraising.
Finding the right unprofitable companies is difficult, which is why we started StockStory - to help you navigate the market. That said, here is one unprofitable company with the potential to become an industry leader and two best left off your radar.
Two Stocks to Sell:
MGP Ingredients (MGPI)
Trailing 12-Month GAAP Operating Margin: -17.6%
Headquartered in Atchison, Kansas, MGP Ingredients (NASDAQ: MGPI) is a leading supplier of high-quality ingredients to the food and beverage industry
Why Do We Think MGPI Will Underperform?
- Sales tumbled by 11.8% annually over the last three years, showing consumer trends are working against its favor
- Inability to adjust its cost structure while its revenue declined over the last year led to a 28.2 percentage point drop in the company’s operating margin
- Earnings per share have dipped by 17% annually over the past three years, which is concerning because stock prices follow EPS over the long term
At $18.36 per share, MGP Ingredients trades at 11.5x forward P/E. To fully understand why you should be careful with MGPI, check out our full research report (it’s free).
Alight (ALIT)
Trailing 12-Month GAAP Operating Margin: -137%
Born from a corporate spinoff in 2017 to focus on employee experience technology, Alight (NYSE: ALIT) provides human capital management solutions that help companies administer employee benefits, payroll, and workforce management systems.
Why Should You Sell ALIT?
- Annual sales declines of 3.7% for the past five years show its products and services struggled to connect with the market during this cycle
- Issuance of new shares over the last two years caused its earnings per share to fall by 16.1% annually, even worse than its revenue declines
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Alight is trading at $0.58 per share, or 1.9x forward P/E. If you’re considering ALIT for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
Hewlett Packard Enterprise (HPE)
Trailing 12-Month GAAP Operating Margin: -1.1%
Born from the 2015 split of the iconic Silicon Valley pioneer Hewlett-Packard, Hewlett Packard Enterprise (NYSE: HPE) provides edge-to-cloud technology solutions that help businesses capture, analyze, and act upon their data across hybrid IT environments.
Why Are We Positive On HPE?
- ARR growth averaged 47.2% over the past two years, showing customers are willing to take multi-year bets on its offerings
- Unparalleled revenue scale of $35.74 billion gives it an edge in distribution
- Market share is on track to rise over the next 12 months as its 16.8% projected revenue growth implies demand will accelerate from its two-year trend
Hewlett Packard Enterprise’s stock price of $23.87 implies a valuation ratio of 9.9x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum — both boxes checked at the same time.
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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.
