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.
Just because a company is spending heavily doesn’t mean it’s on the right track, and StockStory is here to separate the winners from the losers. Keeping that in mind, here are two high-risk, high-reward companies that could turn today’s losses into tomorrow’s gains and one to leave off your radar.
One Stock to Sell:
Guardant Health (GH)
Trailing 12-Month Free Cash Flow Margin: -20.3%
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 Do We Think Twice About GH?
- Modest revenue base of $1.18 billion means it has less operating leverage but can also grow faster if it executes the right sales strategy
- Cash burn makes us question whether it can achieve sustainable long-term growth
- Unprofitable operations could lead to additional rounds of dilutive equity financing if the credit window closes
Guardant Health is trading at $162 per share, or 13.9x forward price-to-sales. If you’re considering GH for your portfolio, see our FREE research report to learn more.
Two Stocks 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 Should COHR Be on Your Watchlist?
- Annual revenue growth of 19.8% over the last two years was superb and indicates its market share increased during this cycle
- Projected revenue growth of 35.3% for the next 12 months is above its two-year trend, pointing to accelerating demand
- Earnings per share grew by 82.4% annually over the last two years and trumped its peers
Coherent’s stock price of $260.81 implies a valuation ratio of 35.1x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Gevo (GEVO)
Trailing 12-Month Free Cash Flow Margin: -25%
Operating one of the largest dairy-based renewable natural gas facilities in the United States, Gevo (NASDAQ: GEVO) produces sustainable aviation fuel and other renewable hydrocarbon fuels from plant-based feedstocks like corn.
Why Do We Like GEVO?
- Annual revenue growth of 19% over the past ten years was outstanding, reflecting market share gains this cycle
- EBITDA margin expanded over the last five years as it scaled and became more efficient
At $1.53 per share, Gevo trades at 9x forward EV-to-EBITDA. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating 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 Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
