Rapid spending isn’t always a sign of progress. Some cash-burning businesses fail to convert investments into meaningful competitive advantages, leaving them vulnerable.
Negative cash flow can lead to trouble, but StockStory helps you identify the businesses that stand a chance of making it through. Keeping that in mind, 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:
AAON (AAON)
Trailing 12-Month Free Cash Flow Margin: -18.4%
Backed by two million square feet of lab testing space, AAON (NASDAQ:AAON) makes heating, ventilation, and air conditioning equipment for different types of buildings.
Why Is AAON Not Exciting?
- Efficiency has decreased over the last five years as its operating margin fell by 6 percentage points
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 22.7% annually
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 27.2 percentage points
AAON is trading at $93.48 per share, or 48x forward P/E. If you’re considering AAON for your portfolio, see our FREE research report to learn more.
Lemonade (LMND)
Trailing 12-Month Free Cash Flow Margin: -5%
Built on the principle of giving back unused premiums to charitable causes selected by policyholders, Lemonade (NYSE:LMND) is a technology-driven insurance company that offers homeowners, renters, pet, car, and life insurance through an AI-powered digital platform.
Why Does LMND Fall Short?
- Incremental sales over the last two years were less profitable as its 17.4% annual earnings per share growth lagged its revenue gains
- Policy losses and capital returns have eroded its book value per share this cycle as its book value per share declined by 7.2% annually over the last five years
- Push for growth has led to negative returns on capital, signaling value destruction
Lemonade’s stock price of $77.09 implies a valuation ratio of 11.6x forward P/B. To fully understand why you should be careful with LMND, check out our full research report (it’s free for active Edge members).
One Stock to Buy:
Fluence Energy (FLNC)
Trailing 12-Month Free Cash Flow Margin: -7.7%
Pioneering the use of lithium-ion batteries for grid storage, Fluence (NASDAQ:FLNC) helps store renewable energy sources with battery systems.
Why Will FLNC Beat the Market?
- Average backlog growth of 21.5% over the past two years shows it has a steady sales pipeline that will drive future orders
- Additional sales over the last two years increased its profitability as the 27.4% annual growth in its earnings per share outpaced its revenue
- Negative free cash flow margin has improved over the last five years, showing the company is one step closer to financial self-sufficiency
At $19.29 per share, Fluence Energy trades at 70.6x forward EV-to-EBITDA. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our 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 244% over the last five years (as of June 30, 2025).
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-small-cap company Exlservice (+354% 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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