3 Cash-Burning Stocks That Concern Us

Rapid spending isn’t always a sign of progress. Some cash-burning businesses fail to convert investments into meaningful competitive advantages, leaving them vulnerable.

Negative cash flow can lead to trouble, but StockStory helps you identify the businesses that stand a chance of making it through. That said, here are three cash-burning companies to avoid and some better opportunities instead.

Sportsman's Warehouse (SPWH)

Trailing 12-Month Free Cash Flow Margin: -4.5%

A go-to destination for individuals passionate about hunting, fishing, camping, hiking, shooting sports, and more, Sportsman's Warehouse (NASDAQ:SPWH) is an American specialty retailer offering a diverse range of active gear, equipment, and apparel.

Why Do We Think SPWH Will Underperform?

1. Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
2. Free cash flow margin dropped by 9.2 percentage points over the last year, implying the company became more capital intensive as competition picked up
3. Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders

Sportsman's Warehouse’s stock price of $2.97 implies a valuation ratio of 2.9x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including SPWH in your portfolio.

Krispy Kreme (DNUT)

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

Famous for its Original Glazed doughnuts and parent company of Insomnia Cookies, Krispy Kreme (NASDAQ:DNUT) is one of the most beloved and well-known fast-food chains in the world.

Why Is DNUT Risky?

1. Earnings per share have dipped by 38.7% annually over the past three years, which is concerning because stock prices follow EPS over the long term
2. Increased cash burn over the last year raises questions about the return timeline for its investments
3. Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders

At $3.64 per share, Krispy Kreme trades at 4.1x forward EV-to-EBITDA. To fully understand why you should be careful with DNUT, check out our full research report (it’s free).

AAON (AAON)

Trailing 12-Month Free Cash Flow Margin: -14.2%

Backed by two million square feet of lab testing space, AAON (NASDAQ:AAON) makes heating, ventilation, and air conditioning equipment for different types of buildings.

Why Are We Wary of AAON?

1. Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 5.2 percentage points
2. Incremental sales over the last two years were much less profitable as its earnings per share fell by 8.3% annually while its revenue grew
3. Free cash flow margin dropped by 26.3 percentage points over the last five years, implying the company became more capital intensive as competition picked up

AAON is trading at $91.49 per share, or 38.1x forward P/E. Dive into our free research report to see why there are better opportunities than AAON.

High-Quality Stocks for All Market Conditions

When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.

Don’t let fear keep you from great opportunities and take a look at Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

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