Three Unprofitable Stocks to Avoid: Krispy Kreme, NeoGenomics, and LifeStance Health Group.

Three unprofitable stocks to avoid are Krispy Kreme (DNUT), NeoGenomics (NEO), and LifeStance Health Group (LFST), due to declining earnings, cash-burning tendencies, and negative returns on capital. These companies face challenges in increasing competition and securing funding, making it difficult to sustainably generate shareholder value. Investors should consider alternative stocks with more promising prospects.

Investors should exercise caution when considering stocks that exhibit declining earnings, high cash burn rates, and negative returns on capital. Three such companies that have raised concerns among financial professionals are Krispy Kreme (DNUT), NeoGenomics (NEO), and LifeStance Health Group (LFST). These companies face significant challenges in increasing competition and securing funding, making it difficult to sustainably generate shareholder value.

Krispy Kreme (DNUT) has been facing declining earnings and a high cash burn rate. The company's reliance on a single product line and increasing competition in the snack market have contributed to its financial struggles. Additionally, the company has not been able to generate consistent returns on capital, making it a risky investment for shareholders.

NeoGenomics (NEO) has also experienced declining earnings and cash burn issues. The company's focus on genetic testing services has not translated into sustainable growth, and the competitive landscape in the industry has put pressure on its financial performance. Furthermore, NeoGenomics has struggled to generate positive returns on capital, which has raised concerns among investors.

LifeStance Health Group (LFST) has been facing similar challenges. While the company reported strong earnings in Q1 2025, with revenue up 10.8% year-on-year to $333 million, it has also been grappling with cash burn tendencies and negative returns on capital. LifeStance's reliance on a hybrid care model and digital initiatives has not been enough to offset the impact of a single payer rate decrease, which has put pressure on its financial performance. Moreover, the company's forward guidance focuses on volume-driven growth and modest rate improvements, which may not be sufficient to sustain long-term shareholder value.

Investors should consider alternative stocks with more promising prospects. Companies that have demonstrated consistent earnings growth, strong cash flow management, and positive returns on capital are more likely to generate sustainable shareholder value.

References:

[1] https://finance.yahoo.com/news/lfst-q1-earnings-call-outpatient-163121735.html
[2] https://www.nasdaq.com/articles/wall-street-analysts-think-lifestance-health-lfst-could-surge-4504-read-placing-bet