Even if a company is profitable, it doesn’t always mean it’s a great investment. Some struggle to maintain growth, face looming threats, or fail to reinvest wisely, limiting their future potential.
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 that may face some trouble.
Two Stocks to Sell:
Gates Industrial Corporation (GTES)
Trailing 12-Month GAAP Operating Margin: 13.7%
Helping create one of the most memorable moments for the iconic “Jurassic Park” film, Gates (NYSE: GTES) offers power transmission and fluid transfer equipment for various industries.
Why Are We Cautious About GTES?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Anticipated sales growth of 2.9% for the next year implies demand will be shaky
- ROIC of 7% reflects management’s challenges in identifying attractive investment opportunities
At $25.68 per share, Gates Industrial Corporation trades at 17x forward P/E. If you’re considering GTES for your portfolio, see our FREE research report to learn more.
US Foods (USFD)
Trailing 12-Month GAAP Operating Margin: 3%
With a fleet of over 6,500 trucks delivering everything from fresh produce to frozen entrées, US Foods (NYSE: USFD) is a major foodservice distributor that supplies food products and services to approximately 250,000 restaurants, healthcare facilities, hotels, and educational institutions across the United States.
Why Do We Steer Clear of USFD?
- Average unit sales growth of 3.5% over the past two years reflects steady demand for its products
- Subpar operating margin of 3% constrains its ability to invest in process improvements or effectively respond to new competitive threats
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
US Foods’s stock price of $88.40 implies a valuation ratio of 19.6x forward P/E. Read our free research report to see why you should think twice about including USFD in your portfolio.
One Stock to Watch:
BrightSpring Health Services (BTSG)
Trailing 12-Month GAAP Operating Margin: 2.1%
Founded in 1974, BrightSpring Health Services (NASDAQ: BTSG) offers home health care, hospice, neuro-rehabilitation, and pharmacy services.
Why Does BTSG Catch Our Eye?
- Annual revenue growth of 21.4% over the last two years was superb and indicates its market share increased during this cycle
- Projected revenue growth of 13.9% for the next 12 months suggests its momentum from the last two years will persist
- Earnings per share grew by 15.7% annually over the last four years, massively outpacing its peers
BrightSpring Health Services is trading at $38.33 per share, or 30.5x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged 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.
