2 Loss-Making Stocks We Recommend and 1 We Choose to Ignore

Assessing Unprofitable Companies: Risks and Opportunities

Companies that are not yet profitable can quickly deplete their cash reserves, putting investors at risk if these businesses fail to achieve profitability. Without a clear strategy to reach positive earnings, such firms may face the danger of exhausting their funds or resorting to raising capital in ways that dilute existing shareholders.

Identifying promising unprofitable companies is no easy task. That’s why StockStory was created—to guide you through the complexities of the market. With that in mind, let’s examine two unprofitable businesses that could become industry frontrunners, as well as one that may be best avoided.

Stock to Avoid

Myriad Genetics (MYGN)

Latest 12-Month GAAP Operating Margin: -47%

Established in 1991, Myriad Genetics (NASDAQ:MYGN) was among the early companies to bring genetic research into clinical practice. The company develops genetic tests that help evaluate disease risk, inform treatment choices, and offer insights in areas such as oncology, women’s health, and mental health.

Reasons for Caution with MYGN:

• Revenue has grown at just 4.6% annually over the past two years, lagging behind other healthcare companies.
• Negative returns on capital indicate that management has lost money during expansion efforts, and declining returns suggest that the company’s traditional profit sources are losing momentum.
• Returns on capital, already low, have continued to fall, implying that recent investments are eroding value rather than creating it.

Currently, Myriad Genetics trades at $5.13 per share, representing a forward P/E ratio of 77.6.

Two Stocks Worth Considering

Datadog (DDOG)

Latest 12-Month GAAP Operating Margin: -1.3%

Named after a database the founders managed at a previous company, Datadog (NASDAQ:DDOG) delivers a software platform that enables organizations to monitor and secure their cloud-based applications, infrastructure, and services.

Why Datadog Stands Out:

• Annual recurring revenue (ARR) has grown by an average of 27.6% over the past year, reflecting strong customer commitment to its solutions.
• Exceptional software capabilities and minimal support costs contribute to an impressive gross margin of 80%.
• Short payback periods on sales and marketing investments allow Datadog to scale rapidly and acquire new customers efficiently.

Datadog shares are priced at $122.50, equating to a forward price-to-sales ratio of 10.5.

Fluence Energy (FLNC)

Latest 12-Month GAAP Operating Margin: -2.2%

Fluence (NASDAQ:FLNC) is a trailblazer in using lithium-ion batteries for grid-scale energy storage, helping to store renewable energy with advanced battery systems.

What Makes Fluence Energy Attractive:

• The company’s sales pipeline remains robust, with its backlog growing by an average of 18.1% over the last two years.
• Earnings per share have surged, compounding at an annual rate of 36.4% over the past four years, far outpacing industry peers.
• Fluence has significantly reduced its cash burn over the past five years, indicating progress toward achieving financial stability.

Fluence Energy is currently valued at $15.67 per share, with a forward P/E of 213.3.

Our Top Stock Picks

Bonus: This Week’s Top 6 Stock Picks — The current market is rapidly distinguishing high-quality stocks from overpriced ones, with AI-driven shifts impacting entire sectors unexpectedly. In such a fast-moving environment, a simple list of good companies isn’t enough.

Our AI-powered system identified Palantir before its 1,662% surge, AppLovin ahead of a 753% rally, and Nvidia before its 1,178% climb. Each week, it highlights six new stocks that meet these rigorous criteria.

Our 2020 selections included well-known names like Nvidia (up 1,326% from June 2020 to June 2025) and lesser-known companies such as Kadant, which delivered a 351% five-year return.