Unprofitable companies face headwinds as they struggle to keep operating expenses under control. Some may be investing heavily, but the majority fail to convert spending into sustainable growth.
Unprofitable companies face an uphill battle, but not all are created equal. Luckily for you, StockStory is here to separate the promising ones from the weak. That said, here are two unprofitable companies with the potential to become industry leaders and one best left off your radar.
One Stock to Sell:
3D Systems (DDD)
Trailing 12-Month GAAP Operating Margin: -63.5%
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 Are We Out on DDD?
- Sales tumbled by 6.9% annually over the last five years, showing market trends are working against its favor during this cycle
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
3D Systems is trading at $1.36 per share, or 0.5x forward price-to-sales. If you’re considering DDD for your portfolio, see our FREE research report to learn more.
Two Stocks to Watch:
Montrose (MEG)
Trailing 12-Month GAAP Operating Margin: -5.2%
Founded to protect a tree-lined two-lane road, Montrose (NYSE: MEG) provides air quality monitoring, environmental laboratory testing, compliance, and environmental consulting services.
Why Could MEG Be a Winner?
- Annual revenue growth of 15.3% over the past two years was outstanding, reflecting market share gains this cycle
- Earnings growth has trumped its peers over the last two years as its EPS has compounded at 146% annually
- Free cash flow margin expanded by 6.9 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
At $21.78 per share, Montrose trades at 8.5x forward EV-to-EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.
Alignment Healthcare (ALHC)
Trailing 12-Month GAAP Operating Margin: -2.2%
Founded in 2013 with a mission to transform healthcare for seniors, Alignment Healthcare (NASDAQ: ALHC) provides Medicare Advantage health plans for seniors with features like concierge services, transportation benefits, and technology-driven care coordination.
Why Is ALHC a Good Business?
- Business is winning new contracts that can potentially increase in value as its customer base averaged 38.8% growth over the past two years
- Market share will likely rise over the next 12 months as its expected revenue growth of 34.7% is robust
- Earnings per share have massively outperformed its peers over the last three years, increasing by 28.3% annually
Alignment Healthcare’s stock price of $13.96 implies a valuation ratio of 48.5x forward EV-to-EBITDA. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
