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.

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 are three cash-burning companies that don’t make the cut and some better opportunities instead.

Hudson Technologies (HDSN)

Trailing 12-Month Free Cash Flow Margin: -3.3%

Founded in 1991, Hudson Technologies (NASDAQ: HDSN) specializes in refrigerant services and solutions, providing refrigerant sales, reclamation, and recycling.

Why Does HDSN Give Us Pause?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 7.6% annually over the last two years
2. Performance over the past two years shows each sale was less profitable as its earnings per share dropped by 39.1% annually, worse than its revenue
3. Diminishing returns on capital suggest its earlier profit pools are drying up

Hudson Technologies is trading at $5.76 per share, or 14.1x forward P/E. To fully understand why you should be careful with HDSN, check out our full research report (it’s free).

EchoStar (SATS)

Trailing 12-Month Free Cash Flow Margin: -7.1%

Following its 2023 acquisition of DISH Network, EchoStar (NASDAQ: SATS) provides satellite communications, pay-TV services, wireless networks, and broadband solutions across consumer and enterprise markets.

Why Are We Wary of SATS?

1. Annual sales declines of 6.1% for the past two years show its products and services struggled to connect with the market during this cycle
2. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
3. Negative EBITDA restricts its access to capital and increases the probability of shareholder dilution if things turn unexpectedly

EchoStar’s stock price of $108.73 implies a valuation ratio of 27.3x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why SATS doesn’t pass our bar.

Golar LNG (GLNG)

Trailing 12-Month Free Cash Flow Margin: -183%

Pioneering a way to monetize stranded gas reserves that would otherwise be uneconomical to develop, Golar LNG (NASDAQ: GLNG) converts ships into floating liquefied natural gas facilities that liquefy natural gas at offshore sites.

Why Are We Cautious About GLNG?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 2.7% annually over the last five years
2. Cash-burning history makes us doubt the long-term viability of its business model
3. Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders

At $43.07 per share, Golar LNG trades at 63.4x forward P/E. Dive into our free research report to see why there are better opportunities than GLNG.

Stocks We Like More

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