Companies that burn cash at a rapid pace can run into serious trouble if they fail to secure funding. Without a clear path to profitability, these businesses risk dilution, mounting debt, or even bankruptcy.
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 are two high-risk, high-reward companies with the potential to scale into market leaders and one that may struggle to stay afloat.
One Industrials Stock to Sell:
GATX (GATX)
Trailing 12-Month Free Cash Flow Margin: -31.2%
Originally founded to ship beer, GATX (NYSE:GATX) provides leasing and management services for railcars and other transportation assets globally.
Why Is GATX Not Exciting?
- Sluggish trends in its active railcars suggest customers aren’t adopting its solutions as quickly as the company hoped
- Cash burn makes us question whether it can achieve sustainable long-term growth
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
GATX’s stock price of $190.32 implies a valuation ratio of 19.5x forward P/E. To fully understand why you should be careful with GATX, check out our full research report (it’s free).
Two Industrials Stocks to Watch:
Graham Corporation (GHM)
Trailing 12-Month Free Cash Flow Margin: -2.6%
Founded when its founder patented a unique design for a vacuum system used in the sugar refining process, Graham (NYSE:GHM) provides vacuum and heat transfer equipment for the energy, petrochemical, refining, and chemical sectors.
Why Will GHM Outperform?
- Sales pipeline is in good shape as its backlog averaged 27.8% growth over the past two years
- Earnings per share grew by 83.3% annually over the last one years and trumped its peers
- Free cash flow margin grew by 15.4 percentage points over the last five years, giving the company more chips to play with
Graham Corporation is trading at $84.13 per share, or 44.1x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
AAR (AIR)
Trailing 12-Month Free Cash Flow Margin: -1.1%
The first third-party MRO approved by the FAA for Safety Management System Requirements, AAR (NYSE:AIR) is a provider of aircraft maintenance services
Why Could AIR Be a Winner?
- Annual revenue growth of 17% over the past two years was outstanding, reflecting market share gains this cycle
- Market share will likely rise over the next 12 months as its expected revenue growth of 15.6% is robust
- Earnings growth has trumped its peers over the last two years as its EPS has compounded at 17.9% annually
At $113.25 per share, AAR trades at 22.4x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in 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.