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.
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 with the potential to scale into a market leader and two that may struggle to stay afloat.
Two Stocks to Sell:
Lucid (LCID)
Trailing 12-Month Free Cash Flow Margin: -281%
Founded by a former Tesla Vice President, Lucid Group (NASDAQ: LCID) designs, manufactures, and sells luxury electric vehicles with long-range capabilities.
Why Does LCID Worry Us?
- Negative 138% gross margin means it loses money on every sale and must pivot or scale quickly to survive
- Negative free cash flow raises questions about the return timeline for its investments
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Lucid is trading at $10.51 per share, or 1.4x forward price-to-sales. Read our free research report to see why you should think twice about including LCID in your portfolio.
Tandem Diabetes (TNDM)
Trailing 12-Month Free Cash Flow Margin: -2.9%
With technology that automatically adjusts insulin delivery based on continuous glucose monitoring data, Tandem Diabetes Care (NASDAQ: TNDM) develops and manufactures automated insulin delivery systems that help people with diabetes manage their blood glucose levels.
Why Is TNDM Risky?
- Earnings per share fell by 18.5% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
- Unprofitable operations could lead to additional rounds of dilutive equity financing if the credit window closes
At $26.23 per share, Tandem Diabetes trades at 32.6x forward EV-to-EBITDA. To fully understand why you should be careful with TNDM, check out our full research report (it’s free).
One Stock to Watch:
Molina Healthcare (MOH)
Trailing 12-Month Free Cash Flow Margin: -1.4%
Founded in 1980 as a provider for underserved communities in Southern California, Molina Healthcare (NYSE: MOH) provides managed healthcare services primarily to low-income individuals through Medicaid, Medicare, and Marketplace insurance programs across 21 states.
Why Are We Positive On MOH?
- Impressive 18.7% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Large revenue base of $45.43 billion gives it power over healthcare providers and plan holders
Molina Healthcare’s stock price of $146.26 implies a valuation ratio of 21.4x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
