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.

A lack of profits can lead to trouble, but StockStory helps you identify the businesses that stand a chance of making it through. That said, here are two unprofitable companies with the potential to become industry leaders and one best left off your radar.

One Stock to Sell:

Plug Power (PLUG)

Trailing 12-Month GAAP Operating Margin: -204%

Powering forklifts for Walmart’s distribution centers, Plug Power (NASDAQ:PLUG) provides hydrogen fuel cells used to power electric motors.

Why Do We Avoid PLUG?

1. Annual revenue growth of 1.3% over the last two years was below our standards for the industrials sector

2. 138.1 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position

3. Short cash runway increases the probability of a capital raise that dilutes existing shareholders

Plug Power is trading at $0.97 per share, or 0.9x forward price-to-sales. To fully understand why you should be careful with PLUG, check out our full research report (it’s free) .

Two Stocks to Watch:

HubSpot (HUBS)

Trailing 12-Month GAAP Operating Margin: -2.6%

Started in 2006 by two MIT grad students, HubSpot (NYSE:HUBS) is a software-as-a-service platform that helps small and medium-sized businesses market themselves, sell, and get found on the internet.

Why Does HUBS Stand Out?

1. Ability to secure long-term commitments with customers is evident in its 21.1% ARR growth over the last year

2. Superior software functionality and low servicing costs lead to a best-in-class gross margin of 85%

3. Operating margin expanded by 6.7 percentage points over the last year as it scaled and became more efficient

At $614.55 per share, HubSpot trades at 10.7x forward price-to-sales. Is now the right time to buy? See for yourself in our full research report, it’s free .

QuinStreet (QNST)

Trailing 12-Month GAAP Operating Margin: -1%

Founded during the dot-com era in 1999 and specializing in high-intent consumer traffic, QuinStreet (NASDAQ:QNST) operates digital performance marketplaces that connect clients in financial and home services with consumers actively searching for their products.

Why Is QNST a Good Business?

1. Annual revenue growth of 27.1% over the last two years was superb and indicates its market share increased during this cycle

2. Notable projected revenue growth of 21% for the next 12 months hints at market share gains

3. Earnings per share have massively outperformed its peers over the last two years, increasing by 99.4% annually