3 Unprofitable Stocks We Find Risky

Barchart·12/04/2025 04:56:16

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.

Finding the right unprofitable companies is difficult, which is why we started StockStory - to help you navigate the market. Keeping that in mind, here are three unprofitable companiesthat don’t make the cut and some better opportunities instead.

Advance Auto Parts (AAP)

Trailing 12-Month GAAP Operating Margin: -10.5%

Founded in Virginia in 1932, Advance Auto Parts (NYSE:AAP) is an auto parts and accessories retailer that sells everything from carburetors to motor oil to car floor mats.

Why Is AAP Risky?

1. Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
2. 6.7 percentage point decline in its free cash flow margin over the last year reflects the company’s increased investments to defend its market position
3. 7× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings

At $53.26 per share, Advance Auto Parts trades at 20.2x forward P/E. Read our free research report to see why you should think twice about including AAP in your portfolio.

Centene (CNC)

Trailing 12-Month GAAP Operating Margin: -3.1%

Serving nearly 1 in 15 Americans through its government healthcare programs, Centene (NYSE:CNC) is a healthcare company that manages government-sponsored health insurance programs like Medicaid and Medicare for low-income and complex-needs populations.

Why Do We Think Twice About CNC?

1. Customer additions have disappointed over the past two years, indicating the company’s value proposition may not be resonating
2. Earnings per share fell by 5.1% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

Centene is trading at $38.93 per share, or 15.9x forward P/E. Check out our free in-depth research report to learn more about why CNC doesn’t pass our bar.

Supernus Pharmaceuticals (SUPN)

Trailing 12-Month GAAP Operating Margin: -5.4%

With a diverse portfolio of eight FDA-approved medications targeting neurological conditions, Supernus Pharmaceuticals (NASDAQ:SUPN) develops and markets treatments for central nervous system disorders including epilepsy, ADHD, Parkinson's disease, and migraine.

Why Are We Out on SUPN?

1. 5.7% annual revenue growth over the last two years was slower than its healthcare peers
2. Revenue base of $681.5 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

Supernus Pharmaceuticals’s stock price of $46.03 implies a valuation ratio of 17.2x forward P/E. To fully understand why you should be careful with SUPN, check out our full research report (it’s free for active Edge members).

Stocks We Like More

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today

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