Rapid spending isn’t always a sign of progress. Some cash-burning businesses fail to convert investments into meaningful competitive advantages, leaving them vulnerable.
Just because a company is spending heavily doesn’t mean it’s on the right track, and StockStory is here to separate the winners from the losers. That said, here is one high-risk, high-reward company with the potential to scale into a market leader and two that could run into serious trouble.
Two Stocks to Sell:
MarineMax (HZO)
Trailing 12-Month Free Cash Flow Margin: -2.1%
Appropriately headquartered in Clearwater, Florida, MarineMax (NYSE:HZO) sells boats, yachts, and other marine products.
Why Do We Think Twice About HZO?
- Store closures and poor same-store sales reveal weak demand and a push toward operational efficiency
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
MarineMax is trading at $22.46 per share, or 8.6x forward P/E. Dive into our free research report to see why there are better opportunities than HZO.
Avis Budget Group (CAR)
Trailing 12-Month Free Cash Flow Margin: -11%
The parent company of brands such as Zipcar and Budget Truck Rental, Avis (NASDAQ:CAR) is a provider of car rental and mobility solutions.
Why Do We Avoid CAR?
- Number of available rental days - car rental has disappointed over the past two years, indicating weak demand for its offerings
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
Avis Budget Group’s stock price of $123.48 implies a valuation ratio of 3.8x forward EV-to-EBITDA. If you’re considering CAR for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
SmartRent (SMRT)
Trailing 12-Month Free Cash Flow Margin: -27.5%
Founded by an employee at a real estate rental company, SmartRent (NYSE:SMRT) provides smart home devices and software for multifamily residential properties, single-family rental homes, and student housing communities.
Why Does SMRT Stand Out?
- ARR growth averaged 28.5% over the past two years, showing customers are willing to take multi-year bets on its offerings
- Earnings per share grew by 43% annually over the last two years and trumped its peers
At $0.92 per share, SmartRent trades at 1.1x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free.