1 Unprofitable Stock on Our Buy List and 2 We Avoid

Running at a loss can be a red flag. Many of these businesses face mounting challenges as competition increases and funding becomes harder to secure.

Unprofitable companies face an uphill battle, but not all are created equal. Luckily for you, StockStory is here to separate the promising ones from the weak. Keeping that in mind, here is one unprofitable company that could turn today’s losses into long-term gains and two that may never reach the Promised Land.

Two Stocks to Sell:

Sprout Social (SPT)

Trailing 12-Month GAAP Operating Margin: -10.4%

Born from the recognition that businesses needed a centralized way to handle their growing social media presence, Sprout Social (NASDAQ:SPT) provides a comprehensive software platform that helps businesses manage, analyze, and optimize their presence across various social media networks.

Why Does SPT Give Us Pause?

1. Products, pricing, or go-to-market strategy may need some adjustments as its 11.1% average billings growth over the last year was weak
2. Estimated sales growth of 10.8% for the next 12 months implies demand will slow from its two-year trend
3. Operating losses show it sacrificed profitability while scaling the business

At $9.86 per share, Sprout Social trades at 1.1x forward price-to-sales. Dive into our free research report to see why there are better opportunities than SPT.

nLIGHT (LASR)

Trailing 12-Month GAAP Operating Margin: -20.9%

Founded by a former CEO and Harvard-educated entrepreneur Scott Keeneyn, nLIGHT (NASDAQ:LASR) offers semiconductor and fiber lasers to the industrial, aerospace & defense, and medical sectors.

Why Do We Avoid LASR?

1. 2.6% annual revenue growth over the last five years was slower than its industrials peers
2. Cash-burning history and the downward spiral in its margin profile make us wonder if it has a viable business model
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

nLIGHT’s stock price of $47.96 implies a valuation ratio of 157.3x forward P/E. If you’re considering LASR for your portfolio, see our FREE research report to learn more.

One Stock to Buy:

StepStone Group (STEP)

Trailing 12-Month GAAP Operating Margin: -108%

Operating as both an advisor and asset manager with over $100 billion in assets under management, StepStone Group (NASDAQ:STEP) is an investment firm that provides clients with access to private market investments across private equity, real estate, private debt, and infrastructure.

Why Should You Buy STEP?

1. Market share has increased this cycle as its 32.5% annual revenue growth over the last two years was exceptional
2. Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 41.4% outpaced its revenue gains

StepStone Group is trading at $75.54 per share, or 32.6x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.

Stocks We Like Even More

Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. 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.