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.
Profits are valuable, but they’re not everything. At StockStory, we help you identify the companies that have real staying power. That said, here are three profitable companies to avoid and some better opportunities instead.
Oxford Industries (OXM)
Trailing 12-Month GAAP Operating Margin: 5.1%
The parent company of Tommy Bahama, Oxford Industries (NYSE: OXM) is a lifestyle fashion conglomerate with brands that embody outdoor happiness.
Why Should You Sell OXM?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its stores
- Projected sales growth of 1.4% for the next 12 months suggests sluggish demand
- Waning returns on capital imply its previous profit engines are losing steam
At $46.57 per share, Oxford Industries trades at 13.6x forward P/E. Check out our free in-depth research report to learn more about why OXM doesn’t pass our bar.
Benchmark (BHE)
Trailing 12-Month GAAP Operating Margin: 4%
Operating as a critical behind-the-scenes partner for complex technology products since 1979, Benchmark Electronics (NYSE: BHE) provides advanced manufacturing, engineering, and technology solutions for original equipment manufacturers across aerospace, medical, industrial, and technology sectors.
Why Do We Think Twice About BHE?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 6.3% annually over the last two years
- Poor free cash flow margin of 0.8% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Underwhelming 7.3% return on capital reflects management’s difficulties in finding profitable growth opportunities
Benchmark’s stock price of $39.68 implies a valuation ratio of 16x forward P/E. If you’re considering BHE for your portfolio, see our FREE research report to learn more.
Kemper (KMPR)
Trailing 12-Month GAAP Operating Margin: 8.7%
Originally known as Unitrin until rebranding in 2011, Kemper (NYSE: KMPR) is an insurance holding company that provides automobile, homeowners, life, and other insurance products to individuals and businesses across the United States.
Why Do We Pass on KMPR?
- Insurance offerings faced market headwinds this cycle, reflected in stagnant net premiums earned over the last five years
- Earnings per share fell by 2% annually over the last five years while its revenue was flat, showing each sale was less profitable
- Book value per share tumbled by 6.3% annually over the last five years, showing insurance sector trends are working against its favor during this cycle
Kemper is trading at $52.53 per share, or 1.1x forward P/B. To fully understand why you should be careful with KMPR, check out our full research report (it’s free).
Stocks We Like More
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at 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-small-cap company Comfort Systems (+782% 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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