I understand why Aston Martin (LSE: AML) – shares have fallen 95% in five years and are now trading for just pennies apiece – they could catch the eye of many bargain hunters.

After all, given the high prices a luxury car brand can charge for its legendary vehicles, it seems like the company should be licensed to print money.

However, of all the shares I own in the UK and US, Aston Martin is not one of them.

Moreover, there are literally hundreds of stocks in the London and New York markets that I believe currently have more attractive long-term prospects.

High debt burden

First, there is the company’s net debt. Net debt is basically the company’s debt, balanced by cash and cash assets.

Many companies have debts. In fact, for some of them it may be a way to accelerate growth if the cost of capital is lower than the return they make on it, for example by buying up-to-date machinery and using it to improve their production capacity.

But two things concern me about Aston Martin’s net debt.

One of them is its scale. It amounts to 1.4 billion pounds.

This is a gigantic amount for a company with a market capitalization of £400 million. It is also growing despite the fact that the company has repeatedly diluted existing shareholders in order to raise up-to-date funds by selling more shares. I think this could happen again in the future if the company continues to be strapped for cash.

The second concern is the interest rate. On £1.4 billion of net debt, the company expects to pay around £150 million in net interest this year. This gives over 17 thousand. pounds net interest per person time.

Why are interest rates so high? Aston Martin’s lenders were able to charge high interest rates because the loss-making company needs money and has constrained ability to find a lender willing to take on the risk.

Countless publicly traded companies have lower net debt relative to their market capitalization (or no net debt at all) and less pricey credit terms.

Unproven business model

But given how pricey Aston Martin cars are, could it try to escalate sales volume and utilize its pricing power to get more money from wealthy customers by selling them the car?

Yes, it could. Indeed, this is one of the attractive elements of the investment justification. However, last year wholesale volumes fell by double-digit percentages, revenues fell by more than a fifth and the already gigantic pre-tax loss widened by more than a quarter.

Tariffs interrupted an unexpected key to success. Perhaps this year will be better in this respect. But on the other hand, there are other risks, such as weakening customer demand in an economy of uncertainty.

Aston Martin has brilliant assets. However, since its current incarnation, going public in 2018, it has been unable to demonstrate that it can consistently translate that brand and engineering resources into a profitable business.

Even without net debt, I generally prefer to invest in companies that have proven they can consistently generate profits rather than losses. With net interest costs of PLN 17,000. pounds per hour the lack of a viable business model becomes even more problematic.

Fortunately, the market is full of stocks that benefit from both proven business models AND much healthier balance sheets than Aston Martin.