3 Cash-Burning Stocks in the Doghouse

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.

Couchbase (BASE)

Trailing 12-Month Free Cash Flow Margin: -8.5%

Formed in 2011 with the merger of Membase and CouchOne, Couchbase (NASDAQ:BASE) is a database-as-a-service platform that allows enterprises to store large volumes of semi-structured data.

Why Do We Think Twice About BASE?

1. Revenue increased by 19.2% annually over the last three years, acceptable on an absolute basis but tepid for a software company enjoying secular tailwinds
2. Long payback periods on sales and marketing expenses limit customer growth and signal the company operates in a highly competitive environment
3. Poor expense management has led to operating losses

Couchbase’s stock price of $17.51 implies a valuation ratio of 4.1x forward price-to-sales. To fully understand why you should be careful with BASE, check out our full research report (it’s free).

Advance Auto Parts (AAP)

Trailing 12-Month Free Cash Flow Margin: -1.1%

Founded in Virginia in 1932, Advance Auto Parts (NYSE:AAP) is an auto parts and accessories retailer that sells everything from carburetors to motor oil to car floor mats.

Why Should You Sell AAP?

1. Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
2. Operating profits fell over the last year as its sales dropped and it struggled to adjust its fixed costs
3. Short cash runway increases the probability of a capital raise that dilutes existing shareholders

At $32.55 per share, Advance Auto Parts trades at 20.9x forward P/E. If you’re considering AAP for your portfolio, see our FREE research report to learn more.

FTAI Infrastructure (FIP)

Trailing 12-Month Free Cash Flow Margin: -29.6%

Spun off from FTAI Aviation in 2021, FTAI Infrastructure (NASDAQ:FIP) invests in and operates infrastructure and related assets across the transportation and energy sectors.

Why Does FIP Fall Short?

1. Suboptimal cost structure is highlighted by its history of operating losses
2. Revenue growth over the past three years was nullified by the company’s new share issuances as its earnings per share fell by 45.7% annually
3. Negative free cash flow raises questions about the return timeline for its investments

FTAI Infrastructure is trading at $4.30 per share, or 2.2x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why FIP doesn’t pass our bar.

Stocks We Like More

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.