Companies that burn cash at a rapid pace can run into serious trouble if they fail to secure funding. Without a clear path to profitability, these businesses risk dilution, mounting debt, or even bankruptcy.
Not all companies are worth the risk, and that’s why we built StockStory - to help you spot the red flags. Keeping that in mind, here is one high-risk, high-reward company that could turn today’s losses into tomorrow’s gains and two to leave off your radar.
Two Stocks to Sell:
Myriad Genetics (MYGN)
Trailing 12-Month Free Cash Flow Margin: -1.6%
Founded in 1991 as one of the pioneers in translating genetic discoveries into clinical applications, Myriad Genetics (NASDAQ: MYGN) develops genetic tests that assess disease risk, guide treatment decisions, and provide insights across oncology, women's health, and mental health.
Why Is MYGN Risky?
- Annual revenue growth of 3.5% over the last two years was below our standards for the healthcare sector
- Push for growth has led to negative returns on capital, signaling value destruction, and its shrinking returns suggest its past profit sources are losing steam
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Myriad Genetics is trading at $4.69 per share, or 38.4x forward P/E. Dive into our free research report to see why there are better opportunities than MYGN.
Guardant Health (GH)
Trailing 12-Month Free Cash Flow Margin: -22%
Pioneering the field of "liquid biopsy" with technology that can identify cancer-specific genetic mutations from a simple blood draw, Guardant Health (NASDAQ: GH) develops blood tests that detect and monitor cancer by analyzing tumor DNA in the bloodstream, helping doctors make treatment decisions without invasive biopsies.
Why Are We Hesitant About GH?
- Subscale operations are evident in its revenue base of $1.08 billion, meaning it has fewer distribution channels than its larger rivals (but more room for growth)
- Cash burn makes us question whether it can achieve sustainable long-term growth
- Negative earnings profile makes it challenging to secure favorable financing terms from lenders
Guardant Health’s stock price of $133.50 implies a valuation ratio of 12x forward price-to-sales. To fully understand why you should be careful with GH, check out our full research report (it’s free).
One Stock to Watch:
Coherent (COHR)
Trailing 12-Month Free Cash Flow Margin: -8.2%
Created through the 2022 rebranding of II-VI Incorporated, a company with roots dating back to 1971, Coherent (NYSE: COHR) develops and manufactures advanced materials, lasers, and optical components for applications ranging from telecommunications to industrial manufacturing.
Why Do We Watch COHR?
- Annual revenue growth of 19.8% over the past two years was outstanding, reflecting market share gains this cycle
- Projected revenue growth of 34.9% for the next 12 months is above its two-year trend, pointing to accelerating demand
- Earnings per share have massively outperformed its peers over the last two years, increasing by 82.4% annually
At $411.80 per share, Coherent trades at 56.1x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
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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.
