Running at a loss can be a red flag. Many of these businesses face mounting challenges as competition increases and funding becomes harder to secure.
Unprofitable companies face an uphill battle, but not all are created equal. Luckily for you, StockStory is here to separate the promising ones from the weak. That said, here are two unprofitable companies that could turn today’s losses into long-term gains and one best left off your radar.
One Stock to Sell:
Simply Good Foods (SMPL)
Trailing 12-Month GAAP Operating Margin: -9.1%
Best known for its Atkins brand that was inspired by the popular diet of the same name, Simply Good Foods (NASDAQ: SMPL) is a packaged food company whose offerings help customers achieve their healthy eating or weight loss goals.
Why Do We Think SMPL Will Underperform?
- Muted 6% annual revenue growth over the last three years shows its demand lagged behind its consumer staples peers
- Forecasted revenue decline of 5.7% for the upcoming 12 months implies demand will fall off a cliff
- Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 24.4 percentage points
Simply Good Foods’s stock price of $13.74 implies a valuation ratio of 8.1x forward P/E. If you’re considering SMPL for your portfolio, see our FREE research report to learn more.
Two Stocks to Watch:
California Resources (CRC)
Trailing 12-Month GAAP Operating Margin: -8.6%
Operating some of California's most productive oil fields including Elk Hills and Belridge, California Resources (NYSE: CRC) explores for and produces crude oil, natural gas, and natural gas liquids from fields across California.
Why Could CRC Be a Winner?
- Annual revenue growth of 17.3% over the past five years was outstanding, reflecting market share gains this cycle
- Superiority of its unit economics results in a top-tier gross margin of 57.2%
- Robust free cash flow margin of 12.9% gives it many options for capital deployment
California Resources is trading at $51.23 per share, or 7.8x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Talos Energy (TALO)
Trailing 12-Month GAAP Operating Margin: -40.3%
Operating its own deepwater production facilities with names like Tarantula, Pompano, and Brutus, Talos Energy (NYSE: TALO) explores for and produces oil and natural gas from offshore wells in the Gulf of Mexico and offshore Mexico.
Why Do We Love TALO?
- Market share has increased this cycle as its 16.9% annual revenue growth over the last eight years was exceptional
- Highly-profitable operating model results in strong unit economics and a premier gross margin of 72.4%
- TALO is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
At $13.53 per share, Talos Energy trades at 22.6x forward P/E. Is now the right time to buy? 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 (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
