Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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 balances growth and profitability and two best left off your watchlist.
Two Stocks to Sell:
Monarch (MCRI)
Trailing 12-Month GAAP Operating Margin: 17.9%
Established in 1993, Monarch (NASDAQ: MCRI) operates luxury casinos and resorts, offering high-end gaming, dining, and hospitality experiences.
Why Is MCRI Not Exciting?
- Sales trends were unexciting over the last two years as its 4% annual growth was below the typical consumer discretionary company
- Estimated sales growth of 2% for the next 12 months implies demand will slow from its two-year trend
- ROIC of 14.4% reflects management’s challenges in identifying attractive investment opportunities
At $81.92 per share, Monarch trades at 8.4x forward EV-to-EBITDA. To fully understand why you should be careful with MCRI, check out our full research report (it’s free).
GXO Logistics (GXO)
Trailing 12-Month GAAP Operating Margin: 1.6%
With notable customers such as Nike and Apple, GXO (NYSE: GXO) manages outsourced supply chains and warehousing for various companies.
Why Do We Think Twice About GXO?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Earnings per share fell by 2.2% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
- 6× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
GXO Logistics’s stock price of $39.63 implies a valuation ratio of 15.1x forward P/E. Check out our free in-depth research report to learn more about why GXO doesn’t pass our bar.
One Stock to Buy:
Super Micro (SMCI)
Trailing 12-Month GAAP Operating Margin: 6.1%
Founded in Silicon Valley in 1993 and known for its modular "building block" approach to server design, Super Micro Computer (NASDAQ: SMCI) designs and manufactures high-performance, energy-efficient server and storage systems for data centers, cloud computing, AI, and edge computing applications.
Why Will SMCI Outperform?
- Annual revenue growth of 81.1% over the past two years was outstanding, reflecting market share gains this cycle
- Earnings per share grew by 23.2% annually over the last five years, massively outpacing its peers
- Rising returns on capital show management is finding more attractive investment opportunities
Super Micro is trading at $39.92 per share, or 13x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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 176% over the last five years.
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 Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.
