Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.
A business making money today isn’t necessarily a winner, which is why we analyze companies across multiple dimensions at StockStory. Keeping that in mind, here is one profitable company that balances growth and profitability and two best left off your watchlist.
Two Stocks to Sell:
Malibu Boats (MBUU)
Trailing 12-Month GAAP Operating Margin: 2.7%
Founded in California in 1982, Malibu Boats (NASDAQ: MBUU) is a manufacturer of high-performance sports boats and luxury watercrafts.
Why Do We Think MBUU Will Underperform?
- Performance surrounding its boats sold has lagged its peers
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 14.2% annually
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Malibu Boats is trading at $31.94 per share, or 12.3x forward P/E. Read our free research report to see why you should think twice about including MBUU in your portfolio.
RadNet (RDNT)
Trailing 12-Month GAAP Operating Margin: 3.4%
With over 350 imaging facilities across seven states and a growing artificial intelligence division, RadNet (NASDAQ: RDNT) operates a network of outpatient diagnostic imaging centers across the United States, offering services like MRI, CT scans, PET scans, mammography, and X-rays.
Why Does RDNT Give Us Pause?
- Revenue base of $1.91 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Efficiency has decreased over the last five years as its adjusted operating margin fell by 2.7 percentage points
- Poor free cash flow margin of 2.7% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
At $77.24 per share, RadNet trades at 138.3x forward P/E. Dive into our free research report to see why there are better opportunities than RDNT.
One Stock to Watch:
United Rentals (URI)
Trailing 12-Month GAAP Operating Margin: 25.5%
Owning the largest rental fleet in the world, United Rentals (NYSE: URI) provides equipment rental and related services to construction, industrial, and infrastructure industries.
Why Does URI Stand Out?
- Annual revenue growth of 11.8% over the past five years was outstanding, reflecting market share gains this cycle
- Highly efficient business model is illustrated by its impressive 25.8% operating margin, and its profits increased over the last five years as it scaled
- Share buybacks catapulted its annual earnings per share growth to 18.1%, which outperformed its revenue gains over the last five years
United Rentals’s stock price of $955.22 implies a valuation ratio of 21.5x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2025 "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 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-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
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
