Unprofitable companies can burn through cash quickly, leaving investors exposed if they fail to turn things around. Without a clear path to profitability, these businesses risk running out of capital or relying on dilutive fundraising.
A lack of profits can lead to trouble, but StockStory helps you identify the businesses that stand a chance of making it through. Keeping that in mind, here are two unprofitable companies investing heavily to secure market share and one best left off your radar.
One Stock to Sell:
RXO (RXO)
Trailing 12-Month GAAP Operating Margin: -1.2%
With access to millions of trucks, RXO (NYSE:RXO) offers full-truckload, less-than-truckload, and last-mile deliveries.
Why Do We Avoid RXO?
- Declining unit sales over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
- 5.3 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
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
RXO’s stock price of $23.25 implies a valuation ratio of 70.8x forward P/E. Dive into our free research report to see why there are better opportunities than RXO.
Two Stocks to Watch:
GitLab (GTLB)
Trailing 12-Month GAAP Operating Margin: -5.1%
With its all-remote workforce pioneering a new approach to software development, GitLab (NASDAQ:GTLB) provides a single-application DevSecOps platform that helps development, operations, and security teams collaborate to build, secure, and deploy software faster.
Why Are We Bullish on GTLB?
- Impressive 27.1% annual revenue growth over the last two years indicates it’s winning market share
- ARR growth averaged 24.9% over the last year, showing customers are willing to take multi-year bets on its software
- Superior software functionality and low servicing costs are reflected in its best-in-class gross margin of 86.8%
At $43.10 per share, GitLab trades at 6x forward price-to-sales. Is now the right time to buy? See for yourself in our full research report, it’s free.
Braze (BRZE)
Trailing 12-Month GAAP Operating Margin: -16.8%
With its technology powering interactions with 6.2 billion monthly active users across the digital landscape, Braze (NASDAQ:BRZE) provides a platform that helps brands build and maintain direct relationships with their customers through personalized, cross-channel messaging and engagement.
Why Are We Positive on BRZE?
- Billings growth has averaged 32.1% over the last year, indicating a healthy pipeline of new contracts that should drive future revenue increases
- Estimated revenue growth of 18.8% for the next 12 months implies its momentum over the last two years will continue
- Well-designed software integrates seamlessly with other workflows, enabling swift payback periods on marketing expenses and customer growth at scale
Braze is trading at $29.52 per share, or 3.3x forward price-to-sales. Is now a good 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.