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. That said, here is one high-risk, high-reward company with the potential to scale into a market leader and two that could run into serious trouble.
Two Stocks to Sell:
Graphic Packaging Holding (GPK)
Trailing 12-Month Free Cash Flow Margin: -4.5%
Founded in 1991, Graphic Packaging (NYSE:GPK) is a provider of paper-based packaging solutions for a wide range of products.
Why Do We Avoid GPK?
- Declining unit sales over the past two years suggest it might have to lower prices to accelerate growth
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
- 8.9 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
Graphic Packaging Holding’s stock price of $16.07 implies a valuation ratio of 7.8x forward P/E. If you’re considering GPK for your portfolio, see our FREE research report to learn more.
STAAR Surgical (STAA)
Trailing 12-Month Free Cash Flow Margin: -19.5%
With over 2.5 million implants performed worldwide, STAAR Surgical (NASDAQ:STAA) designs and manufactures implantable lenses that correct vision problems without removing the eye's natural lens.
Why Should You Dump STAA?
- Underwhelming constant currency revenue performance over the past two years suggests its product offering at current prices doesn’t resonate with customers
- Free cash flow margin dropped by 35.2 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Eroding returns on capital suggest its historical profit centers are aging
STAAR Surgical is trading at $26.57 per share, or 61.6x forward P/E. Check out our free in-depth research report to learn more about why STAA doesn’t pass our bar.
One Stock to Watch:
Charles Schwab (SCHW)
Trailing 12-Month Free Cash Flow Margin: -8.7%
Founded in 1971 as a disruptive force challenging Wall Street's high fees and limited access, Charles Schwab (NYSE:SCHW) is a wealth management and brokerage firm that provides investment services, banking, and financial advice to individual investors and independent advisors.
Why Should SCHW Be on Your Watchlist?
- Annual revenue growth of 17.8% over the last five years was superb and indicates its market share increased during this cycle
- Earnings per share have outperformed the peer group average over the last five years, increasing by 14.5% annually
- Market-beating return on equity illustrates that management has a knack for investing in profitable ventures
At $93.78 per share, Charles Schwab trades at 17.4x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free for active Edge members .
Stocks We Like Even More
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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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