1 Unprofitable Stock with Impressive Fundamentals and 2 We Find Risky

Unprofitable companies can burn through cash quickly, leaving investors exposed if they fail to turn things around. Without a clear path to profitability, these businesses risk running out of capital or relying on dilutive fundraising.

Finding the right unprofitable companies is difficult, which is why we started StockStory - to help you navigate the market. Keeping that in mind, here is one unprofitable company that could turn today’s losses into long-term gains and two best left off your radar.

Two Stocks to Sell:

Xerox (XRX)

Trailing 12-Month GAAP Operating Margin: -2.1%

Pioneering the modern office copier and inventing technologies like Ethernet and the laser printer, Xerox (NASDAQ:XRX) provides document management systems, printing technology, and workplace solutions to businesses of all sizes across the globe.

Why Do We Think XRX Will Underperform?

1. Sales tumbled by 2.6% annually over the last five years, showing market trends are working against its favor during this cycle
2. Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 15.6% annually, worse than its revenue
3. 8× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings

Xerox’s stock price of $2.53 implies a valuation ratio of 3.1x forward P/E. Dive into our free research report to see why there are better opportunities than XRX.

Ocular Therapeutix (OCUL)

Trailing 12-Month GAAP Operating Margin: -450%

Pioneering a drug delivery platform that can eliminate the need for monthly eye injections, Ocular Therapeutix (NASDAQ:OCUL) develops sustained-release treatments for eye diseases using its proprietary ELUTYX bioresorbable hydrogel technology that gradually releases medication.

Why Do We Steer Clear of OCUL?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 1.7% annually over the last two years
2. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 206.8 percentage points
3. Short cash runway increases the probability of a capital raise that dilutes existing shareholders

Ocular Therapeutix is trading at $11.51 per share, or 34.9x forward price-to-sales. If you’re considering OCUL for your portfolio, see our FREE research report to learn more.

One Stock to Buy:

Axon (AXON)

Trailing 12-Month GAAP Operating Margin: -1.1%

Providing body cameras and tasers for first responders, AXON (NASDAQ:AXON) develops technology solutions and weapons products for military, law enforcement, and civilians.

Why Is AXON a Top Pick?

1. Average unit sales growth of 26.3% over the past two years reflects steady demand for its products
2. Operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
3. Earnings per share have massively outperformed its peers over the last two years, increasing by 35.2% annually

At $623.53 per share, Axon trades at 90.7x forward P/E. 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

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 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).

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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.