3 Cash-Burning Stocks We Find Risky
Companies that burn cash at a rapid pace can run into serious trouble if they fail to secure funding. Without a clear path to profitability, these businesses risk dilution, mounting debt, or even bankruptcy.
Just because a company is spending heavily doesn’t mean it’s on the right track, and StockStory is here to separate the winners from the losers. Keeping that in mind, here are three cash-burning companies to steer clear of and a few better alternatives.
Clarus (CLAR)
Trailing 12-Month Free Cash Flow Margin: -4.9%
Initially a financial services business, Clarus (NASDAQ:CLAR) designs, manufactures, and distributes outdoor equipment and lifestyle products.
Why Do We Avoid CLAR?
- Sales were flat over the last five years, indicating it’s failed to expand its business
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Clarus’s stock price of $3.37 implies a valuation ratio of 39.8x forward P/E. If you’re considering CLAR for your portfolio, see our FREE research report to learn more.
Matthews (MATW)
Trailing 12-Month Free Cash Flow Margin: -8.2%
Originally a death care company, Matthews International (NASDAQ:MATW) is a diversified company offering ceremonial services, brand solutions and industrial technologies.
Why Are We Out on MATW?
- Products and services have few die-hard fans as sales have declined by 5% annually over the last five years
- Cash burn makes us question whether it can achieve sustainable long-term growth
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
At $26.75 per share, Matthews trades at 0.7x trailing 12-month price-to-sales. To fully understand why you should be careful with MATW, check out our full research report (it’s free).
DHT Holdings (DHT)
Trailing 12-Month Free Cash Flow Margin: -29.2%
With each vessel capable of carrying roughly 2 million barrels of oil—enough to fill about 125 Olympic swimming pools—DHT Holdings (NYSE:DHT) operates very large crude carriers that transport crude oil across international routes for energy companies and traders.
Why Do We Think Twice About DHT?
- Flat sales over the last five years suggest it must find different ways to grow during this cycle
- Smaller revenue base of $448 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Costly operations and weak unit economics result in an inferior gross margin of 33.5% that must be offset through higher production volumes
DHT Holdings is trading at $17.78 per share, or 5.9x forward P/E. Dive into our free research report to see why there are better opportunities than DHT.
High-Quality Stocks for All Market Conditions
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
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.