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.
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 are three cash-burning companies that don’t make the cut and some better opportunities instead.
Zevia (ZVIA)
Trailing 12-Month Free Cash Flow Margin: -4%
With a primary focus on soda but also a presence in energy drinks and teas, Zevia (NYSE:ZVIA) is a better-for-you beverage company.
Why Are We Cautious About ZVIA?
- Flat sales over the last three years suggest it must innovate and find new ways to grow
- Revenue base of $162.8 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Historical operating margin losses point to an inefficient cost structure
Zevia’s stock price of $2.34 implies a valuation ratio of 264.4x forward EV-to-EBITDA. To fully understand why you should be careful with ZVIA, check out our full research report (it’s free for active Edge members).
Avis Budget Group (CAR)
Trailing 12-Month Free Cash Flow Margin: -8.3%
The parent company of brands such as Zipcar and Budget Truck Rental, Avis (NASDAQ:CAR) is a provider of car rental and mobility solutions.
Why Does CAR Worry Us?
- Number of available rental days - car rental has disappointed over the past two years, indicating weak demand for its offerings
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Avis Budget Group is trading at $134.84 per share, or 16.4x forward P/E. Dive into our free research report to see why there are better opportunities than CAR.
Genco (GNK)
Trailing 12-Month Free Cash Flow Margin: -10.7%
Headquartered in NYC, Genco (NYSE:GNK) is a shipping company that transports dry bulk cargo along worldwide maritime routes.
Why Do We Think GNK Will Underperform?
- Demand for its offerings was relatively low as its number of owned vessels has underwhelmed
- Sales were less profitable over the last two years as its earnings per share fell by 46.6% annually, worse than its revenue declines
- Free cash flow margin dropped by 23.4 percentage points over the last five years, implying the company became more capital intensive as competition picked up
At $18.57 per share, Genco trades at 12.5x forward P/E. Check out our free in-depth research report to learn more about why GNK doesn’t pass our bar.
Stocks We Like More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Growth Stocks for this month. 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 Tecnoglass (+1,754% 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.