1 Cash-Burning Stock with Exciting Potential and 2 Facing Headwinds

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 is one high-risk, high-reward company with the potential to scale into a market leader and two that could run into serious trouble.

Two Stocks to Sell:

Sportsman's Warehouse (SPWH)

Trailing 12-Month Free Cash Flow Margin: -3.3%

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 Is SPWH Risky?

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. Performance over the past three years was negatively impacted by new share issuances as its earnings per share dropped by 32.6% annually, worse than its revenue
3. Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders

Sportsman's Warehouse’s stock price of $1.37 implies a valuation ratio of 24.7x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why SPWH doesn’t pass our bar.

Utz (UTZ)

Trailing 12-Month Free Cash Flow Margin: -1.8%

Tracing its roots back to 1921 when Bill and Salie Utz began making potato chips in their kitchen, Utz Brands (NYSE:UTZ) offers salty snacks such as potato chips, tortilla chips, pretzels, cheese snacks, and ready-to-eat popcorn, among others.

Why Do We Avoid UTZ?

1. Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
2. Subscale operations are evident in its revenue base of $1.44 billion, meaning it has fewer distribution channels than its larger rivals
3. Underwhelming 0.3% return on capital reflects management’s difficulties in finding profitable growth opportunities

At $10.59 per share, Utz trades at 11.9x forward P/E. Read our free research report to see why you should think twice about including UTZ in your portfolio.

One Stock to Watch:

agilon health (AGL)

Trailing 12-Month Free Cash Flow Margin: -1.4%

Transforming how doctors care for seniors by shifting financial incentives from volume to outcomes, agilon health (NYSE:AGL) provides a platform that helps primary care physicians transition to value-based care models for Medicare patients through long-term partnerships and global capitation arrangements.

Why Are We Positive On AGL?

1. Annual revenue growth of 37.2% over the past five years was outstanding, reflecting market share gains this cycle
2. Average customer growth of 19.9% over the past two years demonstrates success in acquiring new clients that could increase their spending in the future
3. Cash burn has become less severe over the last five years, showing the company is making some progress toward financial sustainability

agilon health is trading at $0.74 per share, or 0x forward price-to-sales. Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.

High-Quality Stocks for All Market Conditions

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our 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 244% over the last five years (as of June 30, 2025).

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