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:
J&J Snack Foods (JJSF)
Trailing 12-Month GAAP Operating Margin: 6.4%
Best known for its SuperPretzel soft pretzels and ICEE frozen drinks, J&J Snack Foods (NASDAQ: JJSF) produces a range of snacks and beverages and distributes them primarily to supermarket and food service customers.
Why Does JJSF Fall Short?
- Subscale operations are evident in its revenue base of $1.59 billion, meaning it has fewer distribution channels than its larger rivals
- Estimated sales growth of 2.8% for the next 12 months implies demand will slow from its three-year trend
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
J&J Snack Foods’s stock price of $115.26 implies a valuation ratio of 22.6x forward P/E. To fully understand why you should be careful with JJSF, check out our full research report (it’s free).
JLL (JLL)
Trailing 12-Month GAAP Operating Margin: 3.6%
Founded in 1999 through the merger of Jones Lang Wootton and LaSalle Partners, JLL (NYSE: JLL) is a company specializing in real estate advisory and investment management services.
Why Are We Out on JLL?
- Sizable revenue base leads to growth challenges as its 5.7% annual revenue increases over the last five years fell short of other consumer discretionary companies
- Low free cash flow margin of 2.1% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- ROIC of 7.6% reflects management’s challenges in identifying attractive investment opportunities, and its falling returns suggest its earlier profit pools are drying up
JLL is trading at $237.50 per share, or 14.3x forward P/E. Read our free research report to see why you should think twice about including JLL in your portfolio.
One Stock to Buy:
Eli Lilly (LLY)
Trailing 12-Month GAAP Operating Margin: 28.7%
Founded in 1876 by a Civil War veteran and pharmacist frustrated with the poor quality of medicines, Eli Lilly (NYSE: LLY) discovers, develops, and manufactures pharmaceutical products for conditions including diabetes, obesity, cancer, immunological disorders, and neurological diseases.
Why Should You Buy LLY?
- Impressive 33% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Share repurchases over the last five years enabled its annual earnings per share growth of 17.6% to outpace its revenue gains
- ROIC punches in at 25.8%, illustrating management’s expertise in identifying profitable investments
At $805.95 per share, Eli Lilly trades at 31.8x forward P/E. Is now a good time to buy? See for yourself in our comprehensive 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 9 Market-Beating Stocks. 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.
