Unprofitable companies face headwinds as they struggle to keep operating expenses under control. Some may be investing heavily, but the majority fail to convert spending into sustainable growth.
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 could struggle to survive.
Two Stocks to Sell:
Kulicke and Soffa (KLIC)
Trailing 12-Month GAAP Operating Margin: -10.5%
Headquartered in Singapore, Kulicke & Soffa (NASDAQ: KLIC) is a provider of production equipment and tools used to assemble semiconductor devices
Why Are We Hesitant About KLIC?
- Annual sales declines of 1.6% for the past five years show its products and services struggled to connect with the market during this cycle
- Inability to adjust its cost structure while its revenue declined over the last five years led to a 40.3 percentage point drop in the company’s operating margin
- Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
At $65.50 per share, Kulicke and Soffa trades at 22.4x forward P/E. Dive into our free research report to see why there are better opportunities than KLIC.
PlayStudios (MYPS)
Trailing 12-Month GAAP Operating Margin: -14.8%
Founded by a team of former gaming industry executives, PlayStudios (NASDAQ: MYPS) offers free-to-play digital casino games.
Why Do We Avoid MYPS?
- Sales tumbled by 1.2% annually over the last five years, showing consumer trends are working against its favor
- Historically negative EPS raises concerns for risk-averse investors and makes its earnings potential harder to gauge
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 14.2% for the last two years
PlayStudios’s stock price of $0.50 implies a valuation ratio of 0.3x forward price-to-sales. If you’re considering MYPS for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Lyft (LYFT)
Trailing 12-Month GAAP Operating Margin: -3%
Founded by Logan Green and John Zimmer as a long-distance intercity carpooling company Zimride, Lyft (NASDAQ: LYFT) operates a ridesharing network in the US and Canada.
Why Do We Love LYFT?
- Has the opportunity to boost monetization through new features and premium offerings as its active riders have grown by 12.2% annually over the last two years
- Incremental sales over the last three years have been highly profitable as its earnings per share increased by 64.1% annually, topping its revenue gains
- Free cash flow margin grew by 26.3 percentage points over the last few years, giving the company more chips to play with
Lyft is trading at $13.21 per share, or 7x forward EV/EBITDA. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it's flagging for this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
