While some companies burn cash to fuel expansion, others struggle to turn spending into sustainable growth. A high cash burn rate without a strong balance sheet can leave investors exposed to significant downside.
Negative cash flow can lead to trouble, but StockStory helps you identify the businesses that stand a chance of making it through. That said, here are three cash-burning companies to steer clear of and a few better alternatives.
Norwegian Cruise Line (NCLH)
Trailing 12-Month Free Cash Flow Margin: -11.9%
With amenities like a full go-kart race track built into its ships, Norwegian Cruise Line (NYSE: NCLH) is a premier global cruise company.
Why Do We Steer Clear of NCLH?
- Number of passenger cruise days has disappointed over the past two years, indicating weak demand for its offerings
- 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
Norwegian Cruise Line’s stock price of $20.27 implies a valuation ratio of 9.8x forward P/E. If you’re considering NCLH for your portfolio, see our FREE research report to learn more.
Atlas Energy Solutions (AESI)
Trailing 12-Month Free Cash Flow Margin: -2.8%
Building the world's first long-haul proppant conveyor system to reduce truck traffic, Atlas Energy Solutions (NYSE: AESI) mines and processes sand used as proppant to prop open fractures in oil and gas wells during hydraulic fracturing.
Why Do We Think AESI Will Underperform?
- Revenue base of $1.10 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Day-to-day expenses have swelled relative to revenue over the last five years as its EBITDA margin fell by 20.8 percentage points
- Cash burn makes us question whether it can achieve sustainable long-term growth
At $13.81 per share, Atlas Energy Solutions trades at 11.1x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why AESI doesn’t pass our bar.
Kosmos Energy (KOS)
Trailing 12-Month Free Cash Flow Margin: -14%
Operating in some of the world's deepest waters with projects located up to 120 kilometers offshore, Kosmos Energy (NYSE: KOS) explores for, develops, and produces oil and natural gas from deepwater offshore fields.
Why Does KOS Fall Short?
- Annual revenue growth of 9.9% over the last five years was below our standards for the energy upstream and integrated energy sector
- Cash-burning history makes us doubt the long-term viability of its business model
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
Kosmos Energy is trading at $2.51 per share, or 11x forward P/E. To fully understand why you should be careful with KOS, check out our full research report (it’s free).
Stocks We Like More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 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 Kadant (+351% five-year return). Find your next big winner with StockStory today.
