While some companies burn cash to fuel expansion, others struggle to turn spending into sustainable growth. A high cash burn rate without a strong balance sheet can leave investors exposed to significant downside.

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 are three cash-burning companies that don’t make the cut and some better opportunities instead.

Lincoln Educational (LINC)

Trailing 12-Month Free Cash Flow Margin: -1.7%

Established in 1946, Lincoln Educational (NASDAQ: LINC) is a provider of specialized technical training in the United States, offering career-oriented programs to provide practical skills required in the workforce.

Why Should You Sell LINC?

1. Number of enrolled students has disappointed over the past two years, indicating weak demand for its offerings
2. Cash burn makes us question whether it can achieve sustainable long-term growth
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

Lincoln Educational’s stock price of $42.01 implies a valuation ratio of 52.9x forward P/E. To fully understand why you should be careful with LINC, check out our full research report (it’s free).

GEO Group (GEO)

Trailing 12-Month Free Cash Flow Margin: -1.1%

With a global footprint spanning three continents and approximately 81,000 beds across 100 facilities, GEO Group (NYSE: GEO) operates secure facilities, processing centers, and reentry services for government agencies in the United States, Australia, and South Africa.

Why Is GEO Not Exciting?

1. Sales trends were unexciting over the last five years as its 3.3% annual growth was below the typical business services company
2. Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 4 percentage points
3. 11.1 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position

At $29.65 per share, GEO Group trades at 23.1x forward P/E. If you’re considering GEO for your portfolio, see our FREE research report to learn more.

Ducommun (DCO)

Trailing 12-Month Free Cash Flow Margin: -4.3%

California’s oldest company, Ducommun (NYSE: DCO) is a provider of engineering and manufacturing services for high-performance products primarily within the aerospace and defense industries.

Why Are We Cautious About DCO?

1. Backlog has dropped by 16% on average over the past two years, suggesting it’s losing orders as competition picks up
2. Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 11.2 percentage points
3. Underwhelming 2.4% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its falling returns suggest its earlier profit pools are drying up

Ducommun is trading at $168.78 per share, or 38.9x forward P/E. Read our free research report to see why you should think twice about including DCO in your portfolio.

Stocks We Like 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.

Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.