Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages. Just because a business is in the green today doesn’t mean it will thrive tomorrow.
Profits are valuable, but they’re not everything. At StockStory, we help you identify the companies that have real staying power. Keeping that in mind, here is one profitable company that balances growth and profitability and two best left off your watchlist.
Two Stocks to Sell:
PubMatic (PUBM)
Trailing 12-Month GAAP Operating Margin: 1.3%
Founded in 2006 as an online ad platform helping ad sellers, Pubmatic (NASDAQ: PUBM) is a fully integrated cloud-based programmatic advertising platform.
Why Does PUBM Fall Short?
- Muted 8.7% annual revenue growth over the last three years shows its demand lagged behind its software peers
- Estimated sales growth of 1.9% for the next 12 months implies demand will slow from its three-year trend
- Gross margin of 65.3% is below its competitors, leaving less money to invest in areas like marketing and R&D
PubMatic’s stock price of $10 implies a valuation ratio of 1.7x forward price-to-sales. Read our free research report to see why you should think twice about including PUBM in your portfolio.
Best Buy (BBY)
Trailing 12-Month GAAP Operating Margin: 3%
With humble beginnings as a stereo equipment seller, Best Buy (NYSE: BBY) now sells a broad selection of consumer electronics, appliances, and home office products.
Why Are We Wary of BBY?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Commoditized inventory, bad unit economics, and high competition are reflected in its low gross margin of 22.3%
- Subpar operating margin of 3.3% constrains its ability to invest in process improvements or effectively respond to new competitive threats
At $67.56 per share, Best Buy trades at 10.2x forward P/E. To fully understand why you should be careful with BBY, check out our full research report (it’s free).
One Stock to Watch:
Brinker International (EAT)
Trailing 12-Month GAAP Operating Margin: 8.6%
Founded by Norman Brinker in Dallas, Brinker International (NYSE: EAT) is a casual restaurant chain that operates the Chili’s, Maggiano’s Little Italy, and It’s Just Wings banners.
Why Do We Like EAT?
- Same-store sales growth averaged 11.7% over the past two years, showing it’s bringing new and repeat diners into its restaurants
- Operating margin improvement of 3.6 percentage points over the last year demonstrates its ability to scale efficiently
- Free cash flow margin expanded by 4.2 percentage points over the last year, providing additional flexibility for investments and share buybacks/dividends
Brinker International is trading at $133.15 per share, or 14.4x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks That Overcame Trump’s 2018 Tariffs
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.
