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.
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 investing heavily to secure market share and one best left off your radar.
One Stock to Sell:
nCino (NCNO)
Trailing 12-Month GAAP Operating Margin: -2.9%
Founded in 2011 in North Carolina, nCino (NASDAQ: NCNO) makes cloud-based operating systems for banks and provides that software-as-a-service.
Why Does NCNO Worry Us?
- Estimated sales growth of 5.9% for the next 12 months implies demand will slow from its three-year trend
- Steep infrastructure costs and weaker unit economics for a software company are reflected in its low gross margin of 60.1%
- Suboptimal cost structure is highlighted by its history of operating margin losses
nCino’s stock price of $26.19 implies a valuation ratio of 5.3x forward price-to-sales. If you’re considering NCNO for your portfolio, see our FREE research report to learn more.
Two Stocks to Watch:
HubSpot (HUBS)
Trailing 12-Month GAAP Operating Margin: -2.6%
Started in 2006 by two MIT grad students, HubSpot (NYSE: HUBS) is a software-as-a-service platform that helps small and medium-sized businesses market themselves, sell, and get found on the internet.
Why Do We Like HUBS?
- Billings growth has averaged 19.7% over the last year, indicating a healthy pipeline of new contracts that should drive future revenue increases
- Software is difficult to replicate at scale and results in a top-tier gross margin of 84.8%
- Strong free cash flow margin of 18.3% enables it to reinvest or return capital consistently
At $544 per share, HubSpot trades at 9x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
Warby Parker (WRBY)
Trailing 12-Month GAAP Operating Margin: -2.8%
Founded in 2010, Warby Parker (NYSE: WRBY) designs, manufactures, and sells eyewear, including prescription glasses, sunglasses, and contact lenses, through its e-commerce platform and physical retail locations.
Why Are We Fans of WRBY?
- Bold push to open new stores demonstrates an ambitious strategy to establish itself in underpenetrated territories
- Unique assortment of products and pricing power result in a best-in-class gross margin of 55.1%
- Earnings per share have massively outperformed its peers over the last three years, increasing by 62.4% annually
Warby Parker is trading at $21.36 per share, or 57x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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 6 Stocks for this week. 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-small-cap company Exlservice (+354% 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
