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. That said, here is one unprofitable company investing heavily to secure market share and two best left off your radar.
Two Stocks to Sell:
Hasbro (HAS)
Trailing 12-Month GAAP Operating Margin: -6.3%
Credited with the creation of toys such as Mr. Potato Head and the Rubik’s Cube, Hasbro (NASDAQ: HAS) is a global entertainment company offering a diverse range of toys, games, and multimedia experiences for children and families.
Why Do We Think HAS Will Underperform?
- Products and services aren't resonating with the market as its revenue declined by 3.1% annually over the last five years
- Suboptimal cost structure is highlighted by its history of operating margin losses
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
Hasbro’s stock price of $79.55 implies a valuation ratio of 17.5x forward P/E. Read our free research report to see why you should think twice about including HAS in your portfolio.
Quanex (NX)
Trailing 12-Month GAAP Operating Margin: -12.7%
Starting in the seamless tube industry, Quanex (NYSE: NX) manufactures building products like window, door, kitchen, and bath cabinet components.
Why Is NX Not Exciting?
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 9.6% annually
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 6.2 percentage points
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
At $15.19 per share, Quanex trades at 5.5x forward P/E. Dive into our free research report to see why there are better opportunities than NX.
One Stock to Watch:
Rumble (RUM)
Trailing 12-Month GAAP Operating Margin: -116%
Founded in 2013 as a champion for content creator rights and free expression, Rumble (NASDAQ: RUM) is a video sharing platform that positions itself as a free speech alternative to mainstream platforms, offering creators more favorable revenue-sharing opportunities.
Why Do We Like RUM?
- Annual revenue growth of 19% over the last two years was superb and indicates its market share increased during this cycle
- Projected revenue growth of 12.6% for the next 12 months suggests its momentum from the last two years will persist
Rumble is trading at $7.40 per share, or 18.3x trailing 12-month price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out 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 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 Kadant (+351% 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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