Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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 that may struggle to keep up.
Two Stocks to Sell:
Sprinklr (CXM)
Trailing 12-Month GAAP Operating Margin: 2%
Initially focused only on social media management, Sprinklr (NYSE: CXM) is a leading provider of unified customer experience management software.
Why Do We Think CXM Will Underperform?
- Products, pricing, or go-to-market strategy may need some adjustments as its 4% average billings growth over the last year was weak
- Estimated sales growth of 3.4% for the next 12 months implies demand will slow from its three-year trend
- Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 3.6 percentage points
Sprinklr’s stock price of $8.90 implies a valuation ratio of 2.8x forward price-to-sales. Dive into our free research report to see why there are better opportunities than CXM.
Illumina (ILMN)
Trailing 12-Month GAAP Operating Margin: 35.3%
Pioneering the ability to read the human genome at unprecedented speed and affordability, Illumina (NASDAQ: ILMN) develops and sells advanced DNA sequencing and microarray technologies that allow researchers and clinicians to analyze genetic variations and functions.
Why Should You Sell ILMN?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 8.9% annually while its revenue grew
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
At $96.01 per share, Illumina trades at 20.8x forward P/E. Check out our free in-depth research report to learn more about why ILMN doesn’t pass our bar.
One Stock to Buy:
Sea (SE)
Trailing 12-Month GAAP Operating Margin: 5.8%
Founded in 2009 and a publicly traded company since 2017, Sea (NYSE: SE) started as a gaming platform and has since expanded to offer a variety of services such as e-commerce, digital payments, and financial services across Southeast Asia.
Why Do We Love SE?
- Paying Users have grown by 10.2% annually, allowing for more profitable cross-selling opportunities if it can build complementary products and features
- Platform’s growing usage and its ability to increase user spending by 16.6% annually showcases its high switching costs
- Free cash flow margin grew by 27.2 percentage points over the last few years, giving the company more chips to play with
Sea is trading at $168.76 per share, or 44.6x forward EV/EBITDA. 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 April 2024 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out 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 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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