3 Cash-Burning Stocks We Approach with Caution

While some companies burn cash to fuel expansion, others struggle to turn spending into sustainable growth. A high cash burn rate without a strong balance sheet can leave investors exposed to significant downside.

Not all companies are worth the risk, and that’s why we built StockStory - to help you spot the red flags. Keeping that in mind, here are three cash-burning companies to steer clear of and a few better alternatives.

AAON (AAON)

Trailing 12-Month Free Cash Flow Margin: -9%

Backed by two million square feet of lab testing space, AAON (NASDAQ:AAON) makes heating, ventilation, and air conditioning equipment for different types of buildings.

Why Do We Think Twice About AAON?

1. Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 18.7% annually
2. Long-term business health is up for debate as its cash burn has increased over the last five years
3. Diminishing returns on capital suggest its earlier profit pools are drying up

AAON’s stock price of $107.65 implies a valuation ratio of 48.2x forward P/E. Check out our free in-depth research report to learn more about why AAON doesn’t pass our bar.

Liberty Energy (LBRT)

Trailing 12-Month Free Cash Flow Margin: -4.8%

Operating approximately 40 active fleets across North America's most productive shale basins, Liberty Energy (NYSE:LBRT) provides hydraulic fracturing services that help oil and gas companies extract resources from shale formations.

Why Does LBRT Worry Us?

1. Gross margin of 23.3% is below its competitors, leaving less money to invest in exploration and production
2. Low free cash flow margin of 2.3% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders

Liberty Energy is trading at $24.01 per share, or 91.2x forward P/E. If you’re considering LBRT for your portfolio, see our FREE research report to learn more.

Borr Drilling (BORR)

Trailing 12-Month Free Cash Flow Margin: -11.5%

Operating one of the world's youngest jack-up fleets with an average age under eight years, Borr Drilling (NYSE:BORR) operates jack-up rigs that drill oil and gas wells in shallow waters up to 400 feet deep for exploration and production companies.

Why Does BORR Give Us Pause?

1. Modest revenue base of $1.05 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
2. Cash-burning history makes us doubt the long-term viability of its business model

At $4.51 per share, Borr Drilling trades at 176.1x forward P/E. Read our free research report to see why you should think twice about including BORR in your portfolio.

Stocks We Like 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.

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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.