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.
Negative cash flow can lead to trouble, but StockStory helps you identify the businesses that stand a chance of making it through. Keeping that in mind, here are two high-risk, high-reward companies that could turn today’s losses into tomorrow’s gains and one that may struggle to stay afloat.
One Stock to Sell:
Xponential Fitness (XPOF)
Trailing 12-Month Free Cash Flow Margin: -2.8%
Owner of Club Pilates, Stretch Lab, BFT and Pure Barre, Xponential Fitness (NYSE: XPOF) is a boutique fitness brand offering diverse and specialized exercise experiences.
Why Do We Avoid XPOF?
- Muted 19.5% annual revenue growth over the last five years shows its demand lagged behind its consumer discretionary peers
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
- High net-debt-to-EBITDA ratio of 5× increases the risk of forced asset sales or dilutive financing if operational performance weakens
At $5.43 per share, Xponential Fitness trades at 10x forward P/E. Read our free research report to see why you should think twice about including XPOF in your portfolio.
Two Stocks to Buy:
FTAI Aviation (FTAI)
Trailing 12-Month Free Cash Flow Margin: -29.1%
With a focus on the CFM56 engine that powers Boeing and Airbus’s planes, FTAI Aviation (NASDAQ: FTAI) sells, leases, maintains, and repairs aircraft engines.
What Makes FTAI Stand Out?
- Impressive 50.5% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 35.1% annually
- Negative free cash flow margin has improved over the last five years, showing the company is one step closer to financial self-sufficiency
FTAI Aviation’s stock price of $199.25 implies a valuation ratio of 14.1x forward EV-to-EBITDA. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
FuelCell Energy (FCEL)
Trailing 12-Month Free Cash Flow Margin: -71.3%
Founded in 1969, FuelCell Energy (NASDAQ: FCEL) is a leading manufacturer and developer of carbonate fuel cell technology for stationary power generation.
Why Will FCEL Outperform?
- Impressive 38.8% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Earnings growth has trumped its peers over the last two years as its EPS has compounded at 40.6% annually
- Cash burn has become less severe over the last five years, showing the company is making some progress toward financial sustainability
FuelCell Energy is trading at $19.29 per share, or 5.1x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth 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-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
