While profitability is essential, it doesn’t guarantee long-term success. Some companies that rest on their margins will lose ground as competition intensifies - as Jeff Bezos said, "Your margin is my opportunity".
Not all profitable companies are created equal, and that’s why we built StockStory - to help you find the ones that truly shine bright. Keeping that in mind, here is one profitable company that leverages its financial strength to beat the competition and two best left off your watchlist.
Two Stocks to Sell:
Getty Images (GETY)
Trailing 12-Month GAAP Operating Margin: 17.8%
With a vast library of over 562 million visual assets documenting everything from breaking news to iconic historical moments, Getty Images (NYSE:GETY) is a global visual content marketplace that licenses photos, videos, illustrations, and music to businesses, media outlets, and creative professionals.
Why Do We Pass on GETY?
- Sales were flat over the last two years, indicating it’s failed to expand this cycle
- Free cash flow margin shrank by 7.3 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Getty Images is trading at $1.74 per share, or 2.5x forward EV-to-EBITDA. If you’re considering GETY for your portfolio, see our FREE research report to learn more.
Brunswick (BC)
Trailing 12-Month GAAP Operating Margin: 5.1%
Formerly known as Brunswick-Balke-Collender Company, Brunswick (NYSE: BC) is a designer and manufacturer of recreational marine products, including boats, engines, and marine parts.
Why Are We Out on BC?
- Products and services aren't resonating with the market as its revenue declined by 13.8% annually over the last two years
- Projected 2.8 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
- Eroding returns on capital suggest its historical profit centers are aging
At $59.66 per share, Brunswick trades at 13.6x forward P/E. Read our free research report to see why you should think twice about including BC in your portfolio.
One Stock to Buy:
CSW (CSWI)
Trailing 12-Month GAAP Operating Margin: 21%
With over two centuries of combined operations manufacturing and supplying, CSW (NASDAQ:CSWI) offers special chemicals, coatings, sealants, and lubricants for various industries.
Why Are We Bullish on CSWI?
- Annual revenue growth of 17.9% over the last five years was superb and indicates its market share increased during this cycle
- Highly efficient business model is illustrated by its impressive 18.8% operating margin, and its profits increased over the last five years as it scaled
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 17.6% outpaced its revenue gains
CSW’s stock price of $305.10 implies a valuation ratio of 32.1x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
Trump’s April 2024 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound 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 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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