Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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. That said, here is one profitable company that generates reliable profits without sacrificing growth and two that may face some trouble.
Two Stocks to Sell:
Best Buy (BBY)
Trailing 12-Month GAAP Operating Margin: 2.1%
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 Do We Pass on BBY?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Widely-available products (and therefore stiff competition) result in an inferior gross margin of 22.5% that must be offset through higher volumes
- Subpar operating margin of 3% constrains its ability to invest in process improvements or effectively respond to new competitive threats
Best Buy is trading at $66.09 per share, or 10.1x forward P/E. Read our free research report to see why you should think twice about including BBY in your portfolio.
Bloomin' Brands (BLMN)
Trailing 12-Month GAAP Operating Margin: 1.7%
Owner of the iconic Australian-themed Outback Steakhouse, Bloomin’ Brands (NASDAQ: BLMN) is a leading American restaurant company that owns and operates a portfolio of popular restaurant brands.
Why Is BLMN Risky?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its menu offerings and dining experience
- Projected sales for the next 12 months are flat and suggest demand will be subdued
- High net-debt-to-EBITDA ratio of 7× increases the risk of forced asset sales or dilutive financing if operational performance weakens
At $6.69 per share, Bloomin' Brands trades at 7x forward P/E. Dive into our free research report to see why there are better opportunities than BLMN.
One Stock to Buy:
Powell (POWL)
Trailing 12-Month GAAP Operating Margin: 19.7%
Originally a metal-working shop supporting local petrochemical facilities, Powell (NYSE: POWL) has grown from a small Houston manufacturer to a global provider of electrical systems.
Why Are We Backing POWL?
- Annual revenue growth of 25.7% over the past two years was outstanding, reflecting market share gains this cycle
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 86.5% over the last two years outstripped its revenue performance
- Free cash flow margin expanded by 21.1 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
Powell’s stock price of $436.15 implies a valuation ratio of 27.1x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
