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.
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 are three cash-burning companies to avoid and some better opportunities instead.
Vishay Intertechnology (VSH)
Trailing 12-Month Free Cash Flow Margin: -7.3%
Named after the founder's ancestral village in present-day Lithuania, Vishay Intertechnology (NYSE:VSH) manufactures simple chips and electronic components that are building blocks of virtually all types of electronic devices.
Why Do We Avoid VSH?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 7.3% annually over the last two years
- Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 21.1%
- 16 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
Vishay Intertechnology is trading at $16.00 per share, or 31.2x forward P/E. To fully understand why you should be careful with VSH, check out our full research report (it’s free).
Burlington (BURL)
Trailing 12-Month Free Cash Flow Margin: -3.2%
Founded in 1972 as a discount coat and outerwear retailer, Burlington Stores (NYSE:BURL) is now an off-price retailer that has broadened into general apparel, footwear, and home goods.
Why Do We Think Twice About BURL?
- Annual sales growth of 9.3% over the last three years lagged behind its consumer retail peers as its large revenue base made it difficult to generate incremental demand
- 5.1 percentage point decline in its free cash flow margin over the last year reflects the company’s increased investments to defend its market position
- ROIC of 9% reflects management’s challenges in identifying attractive investment opportunities
Burlington’s stock price of $309.04 implies a valuation ratio of 28.9x forward P/E. Check out our free in-depth research report to learn more about why BURL doesn’t pass our bar.
3D Systems (DDD)
Trailing 12-Month Free Cash Flow Margin: -24.1%
Founded by the inventor of stereolithography, 3D Systems (NYSE:DDD) engineers, manufactures, and sells 3D printers and other related products to the aerospace, automotive, healthcare, and consumer goods industries.
Why Do We Pass on DDD?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 6.7% annually over the last five years
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
At $2.37 per share, 3D Systems trades at 0.8x forward price-to-sales. Dive into our free research report to see why there are better opportunities than DDD.
High-Quality Stocks for All Market Conditions
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 6 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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.