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.
Finding the right unprofitable companies is difficult, which is why we started StockStory — to help you navigate the market. Keeping that in mind, here is one unprofitable company that could turn today’s losses into long-term gains and two best left off your radar.
Two Stocks to Sell:
C3.ai (AI)
Trailing 12-Month GAAP Operating Margin: -152%
Named after the three Cs of its original focus—carbon, cloud computing, and customer relationship management—C3.ai (NYSE: AI) provides enterprise AI software that helps organizations develop, deploy, and operate large-scale artificial intelligence applications across various industries.
Why Should You Sell AI?
- Billings have dropped by 11.2% over the last year, suggesting it might have to lower prices to stimulate growth
- Gross margin of 43.5% reflects its high servicing costs
- Cash burn makes us question whether it can achieve sustainable long-term growth
At $9.63 per share, C3.ai trades at 6.5x forward price-to-sales. To fully understand why you should be careful with AI, check out our full research report (it’s free).
AeroVironment (AVAV)
Trailing 12-Month GAAP Operating Margin: -16.4%
Focused on the future of autonomous military combat, AeroVironment (NASDAQ: AVAV) specializes in advanced unmanned aircraft systems and electric vehicle charging solutions.
Why Are We Hesitant About AVAV?
- Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 15.3 percentage points
- Incremental sales over the last two years were much less profitable as its earnings per share fell by 8.4% annually while its revenue grew
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 6.3 percentage points
AeroVironment is trading at $179.55 per share, or 46.8x forward P/E. If you’re considering AVAV for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Cloudflare (NET)
Trailing 12-Month GAAP Operating Margin: -9.3%
With a massive network spanning more than 310 cities in over 120 countries, Cloudflare (NYSE: NET) provides a global network that delivers security, performance and reliability services to protect websites, applications, and corporate networks.
Why Is NET a Top Pick?
- Winning new contracts that can potentially increase in value as its billings growth has averaged 34.2% over the last year
- Expected revenue growth of 28.4% for the next year suggests its market share will rise
- User-friendly software enables clients to ramp up spending quickly, leading to the speedy recovery of customer acquisition costs
Cloudflare’s stock price of $213.53 implies a valuation ratio of 25.7x forward price-to-sales. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
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.
