Rapid spending isn’t always a sign of progress. Some cash-burning businesses fail to convert investments into meaningful competitive advantages, leaving them vulnerable.
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 is one high-risk, high-reward company with the potential to scale into a market leader and two to leave off your radar.
Two Stocks to Sell:
Vital Farms (VITL)
Trailing 12-Month Free Cash Flow Margin: -11.4%
With an emphasis on ethically produced products, Vital Farms (NASDAQ: VITL) specializes in pasture-raised eggs and butter.
Why Are We Hesitant About VITL?
- Subscale operations are evident in its revenue base of $784.4 million, meaning it has fewer distribution channels than its larger rivals
- Projected sales are flat for the next 12 months, implying demand will slow from its three-year trend
- Free cash flow margin shrank by 14 percentage points over the last year, suggesting the company is consuming more capital to stay competitive
At $8.82 per share, Vital Farms trades at 0.5x forward price-to-sales. If you’re considering VITL for your portfolio, see our FREE research report to learn more.
Avis Budget Group (CAR)
Trailing 12-Month Free Cash Flow Margin: -2.3%
The parent company of brands such as Zipcar and Budget Truck Rental, Avis (NASDAQ: CAR) is a provider of car rental and mobility solutions.
Why Is CAR Not Exciting?
- Annual sales declines of 1% for the past two years show its products and services struggled to connect with the market during this cycle
- Waning returns on capital imply its previous profit engines are losing steam
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
Avis Budget Group’s stock price of $152.06 implies a valuation ratio of 0.4x forward price-to-sales. Read our free research report to see why you should think twice about including CAR in your portfolio.
One Stock to Watch:
IonQ (IONQ)
Trailing 12-Month Free Cash Flow Margin: -226%
Founded by quantum physics pioneers from the University of Maryland and Duke University in 2015, IonQ (NYSE: IONQ) develops quantum computers that process information using trapped ions to solve complex computational problems beyond the capabilities of traditional computers.
Why Are We Fans of IONQ?
- Annual revenue growth of 172% over the last two years was superb and indicates its market share increased during this cycle
- Revenue outlook for the upcoming 12 months is outstanding and shows it’s on track to gain market share
- Adjusted operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
IonQ is trading at $56.46 per share, or 63.8x forward price-to-sales. Is now the right 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 for 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 (+1,326% 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.
