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 investing aggressively to carve out a leadership position and two to leave off your radar.
Two Stocks to Sell:
Perma-Fix (PESI)
Trailing 12-Month Free Cash Flow Margin: -37.9%
Tackling hazardous waste challenges since 1990, Perma-Fix (NASDAQ:PESI) provides environmental waste treatment services.
Why Are We Out on PESI?
- Annual sales declines of 10.2% for the past five years show its products and services struggled to connect with the market during this cycle
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
At $15.60 per share, Perma-Fix trades at 4.1x forward price-to-sales. Read our free research report to see why you should think twice about including PESI in your portfolio.
Valaris (VAL)
Trailing 12-Month Free Cash Flow Margin: -1.1%
Operating the world's largest fleet of offshore drilling rigs across six continents, Valaris (NYSE:VAL) provides offshore drilling rigs and crews to oil and gas companies exploring and producing in deep waters and shallow seas.
Why Are We Cautious About VAL?
- Annual sales declines of 5% for the past ten years show its products and services struggled to connect with the market during this cycle
- High extraction costs and unfavorable asset economics are reflected in its low gross margin of 21.5%
- Negative free cash flow raises questions about the return timeline for its investments
Valaris’s stock price of $78.41 implies a valuation ratio of 12.9x forward P/E. Dive into our free research report to see why there are better opportunities than VAL.
One Stock to Watch:
FTAI Infrastructure (FIP)
Trailing 12-Month Free Cash Flow Margin: -48.4%
Spun off from FTAI Aviation in 2021, FTAI Infrastructure (NASDAQ:FIP) invests in and operates infrastructure and related assets across the transportation and energy sectors.
Why Are We Fans of FIP?
- Annual revenue growth of 41.4% over the last two years was superb and indicates its market share increased during this cycle
- Market share will likely rise over the next 12 months as its expected revenue growth of 13.7% is robust
- Above-average gross margin of 30.1% gives it the ability to invest in R&D and run marketing campaigns
FTAI Infrastructure is trading at $2.74 per share, or 8.4x forward EV-to-EBITDA. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is 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% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. 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 (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.