Running at a loss can be a red flag. Many of these businesses face mounting challenges as competition increases and funding becomes harder to secure.
A lack of profits can lead to trouble, but StockStory helps you identify the businesses that stand a chance of making it through. Keeping that in mind, here is one unprofitable company with the potential to become an industry leader and two that could struggle to survive.
Two Stocks to Sell:
Marcus & Millichap (MMI)
Trailing 12-Month GAAP Operating Margin: -4.7%
Founded in 1971, Marcus & Millichap (NYSE: MMI) specializes in commercial real estate investment sales, financing, research, and advisory services.
Why Do We Pass on MMI?
- Products and services have few die-hard fans as sales have declined by 2.9% annually over the last five years
- Cash-burning history makes us doubt the long-term viability of its business model
- Waning returns on capital imply its previous profit engines are losing steam
Marcus & Millichap is trading at $30.80 per share, or 385.9x forward price-to-earnings. If you’re considering MMI for your portfolio, see our FREE research report to learn more.
RXO (RXO)
Trailing 12-Month GAAP Operating Margin: -1.1%
With access to millions of trucks, RXO (NYSE: RXO) offers full-truckload, less-than-truckload, and last-mile deliveries.
Why Are We Cautious About RXO?
- Annual sales declines of 2.6% for the past two years show its products and services struggled to connect with the market during this cycle
- Sales were less profitable over the last two years as its earnings per share fell by 74.3% annually, worse than its revenue declines
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
At $13.69 per share, RXO trades at 33.7x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than RXO.
One Stock to Watch:
Roblox (RBLX)
Trailing 12-Month GAAP Operating Margin: -29.5%
Best known for its wide assortment of user-generated content, Roblox (NYSE: RBLX) is an online gaming platform and game creation system.
Why Should RBLX Be on Your Watchlist?
- Daily Active Users have grown by 21.7% annually, allowing for more profitable cross-selling opportunities if it can build complementary products and features
- Forecasted revenue growth of 20% for the next 12 months indicates its momentum over the last three years is sustainable
- Iconic platform is known by nearly everyone in its market, allowing it to acquire new users at little to no cost
Roblox’s stock price of $65.06 implies a valuation ratio of 42.2x forward EV-to-EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out 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 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.
