3 Cash-Burning Stocks That Concern Us

Companies that burn cash at a rapid pace can run into serious trouble if they fail to secure funding. Without a clear path to profitability, these businesses risk dilution, mounting debt, or even bankruptcy.

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.

Bally's (BALY)

Trailing 12-Month Free Cash Flow Margin: -11.1%

Headquartered in Providence, Rhode Island, Bally's Corporation (NYSE:BALY) is a diversified global casino-entertainment company that owns and manages casinos, resorts, and online gaming platforms.

Why Do We Avoid BALY?

1. 2% annual revenue growth over the last two years was slower than its consumer discretionary peers
2. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
3. Short cash runway increases the probability of a capital raise that dilutes existing shareholders

Bally’s stock price of $16.62 implies a valuation ratio of 11.8x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including BALY in your portfolio.

Sabre (SABR)

Trailing 12-Month Free Cash Flow Margin: -9.2%

Originally a division of American Airlines, Sabre (NASDAQ:SABR) is a technology provider for the global travel and tourism industry.

Why Should You Dump SABR?

1. Number of central reservation system transactions has disappointed over the past two years, indicating weak demand for its offerings
2. Cash burn makes us question whether it can achieve sustainable long-term growth
3. High net-debt-to-EBITDA ratio of 7× could force the company to raise capital at unfavorable terms if market conditions deteriorate

Sabre is trading at $1.35 per share, or 10.9x forward P/E. To fully understand why you should be careful with SABR, check out our full research report (it’s free for active Edge members).

American Outdoor Brands (AOUT)

Trailing 12-Month Free Cash Flow Margin: -2.3%

Spun off from Smith and Wesson in 2020, American Outdoor Brands (NASDAQ:AOUT) is an outdoor and recreational products company that offers outdoor and shooting sports products but does not sell firearms themselves.

Why Do We Pass on AOUT?

1. Sales were flat over the last five years, indicating it’s failed to expand its business
2. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 1.5% for the last two years
3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

At $7.92 per share, American Outdoor Brands trades at 36x forward P/E. Dive into our free research report to see why there are better opportunities than AOUT.

Stocks We Like More

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here in our Top 6 Stocks for this week. 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).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.