Rapid spending isn’t always a sign of progress. Some cash-burning businesses fail to convert investments into meaningful competitive advantages, leaving them vulnerable.
Not all companies are worth the risk, and that’s why we built StockStory - to help you spot the red flags. That said, here are three cash-burning companies to steer clear of and a few better alternatives.
Amkor (AMKR)
Trailing 12-Month Free Cash Flow Margin: -2.3%
Operating through a largely Asian facility footprint, Amkor Technologies (NASDAQ: AMKR) provides outsourced packaging and testing for semiconductors.
Why Are We Bearish on AMKR?
- Sales trends were unexciting over the last two years as its 7.9% annual growth was below the typical semiconductor company
- High input costs result in an inferior gross margin of 14.6% that must be offset through higher volumes
- Low free cash flow margin of 0.8% declined over the last five years as its investments ramped, giving it little breathing room
At $55.72 per share, Amkor trades at 19.7x forward P/E. To fully understand why you should be careful with AMKR, check out our full research report (it’s free).
Norwegian Cruise Line (NCLH)
Trailing 12-Month Free Cash Flow Margin: -11.7%
With amenities like a full go-kart race track built into its ships, Norwegian Cruise Line (NYSE: NCLH) is a premier global cruise company.
Why Do We Pass on NCLH?
- Performance surrounding its passenger cruise days has lagged its peers
- Negative free cash flow margin is expected to improve next year, meaning the company is striving to become a self-sustaining business
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
Norwegian Cruise Line is trading at $18.91 per share, or 14.6x forward P/E. Dive into our free research report to see why there are better opportunities than NCLH.
Richardson Electronics (RELL)
Trailing 12-Month Free Cash Flow Margin: -1.6%
Founded in 1947, Richardson Electronics (NASDAQ: RELL) is a distributor of power grid and microwave tubes as well as consumables related to those products.
Why Does RELL Worry Us?
- Annual revenue growth of 5.3% over the last five years was below our standards for the industrials sector
- Lacking free cash flow margin got worse over the last five years as its investment needs accelerated
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Richardson Electronics’s stock price of $20.67 implies a valuation ratio of 40x forward P/E. Read our free research report to see why you should think twice about including RELL in your portfolio.
High-Quality Stocks for All Market Conditions
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 (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
