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1 Cash-Burning Stock for Long-Term Investors and 2 We Avoid
Rapid spending isn’t always a sign of progress. Some cash-burning businesses fail to convert investments into meaningful competitive advantages, leaving them vulnerable.
Negative cash flow can lead to trouble, but StockStory helps you identify the businesses that stand a chance of making it through. That said, here is one high-risk, high-reward company investing aggressively to carve out a leadership position and two that could run into serious trouble.
Two Stocks to Sell:
Kura Sushi (KRUS)
Trailing 12-Month Free Cash Flow Margin: -7.8%
Known for its conveyor belt that transports dishes to diners, Kura Sushi (NASDAQ:KRUS) is a chain of sushi restaurants serving traditional Japanese fare with a touch of modernity and technology.
Why Is KRUS Not Exciting?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its menu offerings and dining experience
- Cash burn makes us question whether it can achieve sustainable long-term growth
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
At $38.25 per share, Kura Sushi trades at 335.1x forward P/E. If you’re considering KRUS for your portfolio, see our FREE research report to learn more.
Plug Power (PLUG)
Trailing 12-Month Free Cash Flow Margin: -70.3%
Powering forklifts for Walmart’s distribution centers, Plug Power (NASDAQ:PLUG) provides hydrogen fuel cells used to power electric motors.
Why Does PLUG Give Us Pause?
- Sales trends were unexciting over the last two years as its 4.3% annual growth was below the typical industrials company
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
Plug Power is trading at $1.78 per share, or 2.9x forward price-to-sales. Dive into our free research report to see why there are better opportunities than PLUG.
One Stock to Watch:
Gevo (GEVO)
Trailing 12-Month Free Cash Flow Margin: -31.9%
Operating one of the largest dairy-based renewable natural gas facilities in the United States, Gevo (NASDAQ:GEVO) produces sustainable aviation fuel and other renewable hydrocarbon fuels from plant-based feedstocks like corn.
Why Are We Fans of GEVO?
- Annual revenue growth of 19.6% over the past ten years was outstanding, reflecting market share gains this cycle
- EBITDA profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
Gevo’s stock price of $1.32 implies a valuation ratio of 6.4x forward EV-to-EBITDA. 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 Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.