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. That said, here is one high-risk, high-reward company investing aggressively to carve out a leadership position and two to leave off your radar.
Two Stocks to Sell:
Whirlpool (WHR)
Trailing 12-Month Free Cash Flow Margin: -1.2%
Credited with introducing the first automatic washing machine, Whirlpool (NYSE: WHR) is a manufacturer of a variety of home appliances.
Why Do We Think WHR Will Underperform?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 7.3% annually over the last five years
- Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 38.4% annually, worse than its revenue
- High net-debt-to-EBITDA ratio of 9× increases the risk of forced asset sales or dilutive financing if operational performance weakens
At $40.24 per share, Whirlpool trades at 12.1x forward P/E. To fully understand why you should be careful with WHR, check out our full research report (it’s free).
STAAR Surgical (STAA)
Trailing 12-Month Free Cash Flow Margin: -2%
With over 2.5 million implants performed worldwide, STAAR Surgical (NASDAQ: STAA) designs and manufactures implantable lenses that correct vision problems without removing the eye's natural lens.
Why Are We Bearish on STAA?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last two years
- Subscale operations are evident in its revenue base of $339.6 million, meaning it has fewer distribution channels than its larger rivals
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
STAAR Surgical is trading at $22.87 per share, or 26.9x forward P/E. Read our free research report to see why you should think twice about including STAA in your portfolio.
One Stock to Watch:
AAON (AAON)
Trailing 12-Month Free Cash Flow Margin: -6.1%
Backed by two million square feet of lab testing space, AAON (NASDAQ: AAON) makes heating, ventilation, and air conditioning equipment for different types of buildings.
Why Are We Fans of AAON?
- Demand is greater than supply as the company’s 93.5% average backlog growth over the past two years shows it’s securing new contracts and accumulating more orders than it can fulfill
- Revenue outlook for the upcoming 12 months is outstanding and shows it’s on track to gain market share
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
AAON’s stock price of $80.93 implies a valuation ratio of 27.9x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive 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 meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
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-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
