Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.
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:
Kellanova (K)
Trailing 12-Month GAAP Operating Margin: 15.1%
With Corn Flakes as its first and most iconic product, Kellanova (NYSE: K) is a packaged foods company that is dominant in the cereal and snack categories.
Why Are We Wary of K?
- Shrinking unit sales over the past two years imply it may need to invest in product improvements to get back on track
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 1.7%
- Earnings per share have contracted by 3.5% annually over the last three years, a headwind for returns as stock prices often echo long-term EPS performance
Kellanova is trading at $79.72 per share, or 20.3x forward P/E. Read our free research report to see why you should think twice about including K in your portfolio.
BrightView (BV)
Trailing 12-Month GAAP Operating Margin: 4.5%
An official field consultant for Major League Baseball, BrightView (NYSE: BV) offers landscaping design, development, and maintenance.
Why Do We Pass on BV?
- Flat sales over the last two years suggest it must find different ways to grow during this cycle
- Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
- Low returns on capital reflect management’s struggle to allocate funds effectively
BrightView’s stock price of $15.56 implies a valuation ratio of 17.5x forward P/E. To fully understand why you should be careful with BV, check out our full research report (it’s free).
One Stock to Buy:
Vertiv (VRT)
Trailing 12-Month GAAP Operating Margin: 17.3%
Formerly part of Emerson Electric, Vertiv (NYSE: VRT) manufactures and services infrastructure technology products for data centers and communication networks.
Why Should You Buy VRT?
- Core business is healthy and doesn’t need acquisitions to boost sales as its organic revenue growth averaged 18.5% over the past two years
- Free cash flow margin expanded by 6.5 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
- Improving returns on capital reflect management’s ability to monetize investments
At $120.54 per share, Vertiv trades at 32.4x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
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 5 Strong Momentum 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-micro-cap company Tecnoglass (+1,754% 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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