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. That said, 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:
Domo (DOMO)
Trailing 12-Month Free Cash Flow Margin: -1.6%
Named for the Japanese word meaning "thank you very much," Domo (NASDAQ:DOMO) provides a cloud-based business intelligence platform that connects people with real-time data and insights across organizations.
Why Do We Steer Clear of DOMO?
- Offerings couldn’t generate interest over the last year as its billings have averaged 1.1% declines
- Projected sales for the next 12 months are flat and suggest demand will be subdued
- Customer acquisition costs take a while to recoup, making it difficult to justify sales and marketing investments that could increase revenue
Domo is trading at $13.49 per share, or 1.6x forward price-to-sales. To fully understand why you should be careful with DOMO, check out our full research report (it’s free for active Edge members).
Bally's (BALY)
Trailing 12-Month Free Cash Flow Margin: -6.9%
Headquartered in Providence, Rhode Island, Bally's Corporation (NYSE:BALY) is a diversified global casino-entertainment company that owns and manages casinos, resorts, and online gaming platforms.
Why Are We Out on BALY?
- 2.5% annual revenue growth over the last two years was slower than its consumer discretionary peers
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
At $17.12 per share, Bally's trades at 2.2x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including BALY in your portfolio.
One Stock to Watch:
Rivian (RIVN)
Trailing 12-Month Free Cash Flow Margin: -8.4%
The manufacturer of Amazon’s delivery trucks, Rivian (NASDAQ:RIVN) designs, manufactures, and sells electric vehicles and commercial delivery vans.
Why Does RIVN Stand Out?
- Annual revenue growth of 24.2% over the past two years was outstanding, reflecting market share gains this cycle
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 33.4% outpaced its revenue gains
Rivian’s stock price of $15.35 implies a valuation ratio of 3x forward price-to-sales. Is now a good time to buy? See for yourself in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Fresh US-China trade tensions just tanked stocks—but strong bank earnings are fueling a sharp rebound. Don’t miss the bounce.
Don’t let fear keep you from great opportunities and take a look at 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 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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