Unprofitable companies can burn through cash quickly, leaving investors exposed if they fail to turn things around. Without a clear path to profitability, these businesses risk running out of capital or relying on dilutive fundraising.
Finding the right unprofitable companies is difficult, which is why we started StockStory - to help you navigate the market. Keeping that in mind, here is one unprofitable company that could turn today’s losses into long-term gains and two best left off your radar.
Two Stocks to Sell:
Xerox (XRX)
Trailing 12-Month GAAP Operating Margin: -2.1%
Pioneering the modern office copier and inventing technologies like Ethernet and the laser printer, Xerox (NASDAQ: XRX) provides document management systems, printing technology, and workplace solutions to businesses of all sizes across the globe.
Why Do We Think XRX Will Underperform?
- Sales tumbled by 2.6% annually over the last five years, showing market trends are working against its favor during this cycle
- Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 15.6% annually, worse than its revenue
- 8× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
Xerox’s stock price of $2.53 implies a valuation ratio of 3.1x forward P/E. Dive into our free research report to see why there are better opportunities than XRX.
Ocular Therapeutix (OCUL)
Trailing 12-Month GAAP Operating Margin: -450%
Pioneering a drug delivery platform that can eliminate the need for monthly eye injections, Ocular Therapeutix (NASDAQ: OCUL) develops sustained-release treatments for eye diseases using its proprietary ELUTYX bioresorbable hydrogel technology that gradually releases medication.
Why Do We Steer Clear of OCUL?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 1.7% annually over the last two years
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 206.8 percentage points
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
Ocular Therapeutix is trading at $11.51 per share, or 34.9x forward price-to-sales. If you’re considering OCUL for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Axon (AXON)
Trailing 12-Month GAAP Operating Margin: -1.1%
Providing body cameras and tasers for first responders, AXON (NASDAQ: AXON) develops technology solutions and weapons products for military, law enforcement, and civilians.
Why Is AXON a Top Pick?
- Average unit sales growth of 26.3% over the past two years reflects steady demand for its products
- Operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
- Earnings per share have massively outperformed its peers over the last two years, increasing by 35.2% annually
At $623.53 per share, Axon trades at 90.7x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
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 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.
