3 Cash-Burning Stocks We Keep Off Our Radar

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. That said, here are three cash-burning companies to avoid and some better opportunities instead.

Sweetgreen (SG)

Trailing 12-Month Free Cash Flow Margin: -8.9%

Founded in 2007 by three Georgetown University alum, Sweetgreen (NYSE:SG) is a casual quick service chain known for its healthy salads and bowls.

Why Are We Cautious About SG?

1. Historical operating margin losses point to an inefficient cost structure
2. Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
3. Short cash runway increases the probability of a capital raise that dilutes existing shareholders

Sweetgreen is trading at $13.75 per share, or 39.9x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than SG.

Beyond Meat (BYND)

Trailing 12-Month Free Cash Flow Margin: -33.6%

A pioneer at the forefront of the plant-based protein revolution, Beyond Meat (NASDAQ:BYND) is a food company specializing in alternatives to traditional meat products.

Why Do We Pass on BYND?

1. Shrinking unit sales over the past two years show it’s struggled to move its products and had to rely on price increases
2. Cash burn makes us question whether it can achieve sustainable long-term growth
3. Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution

Beyond Meat’s stock price of $3.42 implies a valuation ratio of 0.8x forward price-to-sales. To fully understand why you should be careful with BYND, check out our full research report (it’s free).

Enviri (NVRI)

Trailing 12-Month Free Cash Flow Margin: -2.1%

Cooling America’s first indoor ice rink in the 19th century, Enviri (NYSE:NVRI) offers steel and waste handling services.

Why Do We Avoid NVRI?

1. 7.1% annual revenue growth over the last two years was slower than its industrials peers
2. Cash-burning history makes us doubt the long-term viability of its business model
3. Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders

At $9.40 per share, Enviri trades at 3x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including NVRI in your portfolio.

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