Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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 leverages its financial strength to beat the competition and two that may face some trouble.

Two Stocks to Sell:

Home Depot (HD)

Trailing 12-Month GAAP Operating Margin: 13.1%

Founded and headquartered in Atlanta, Georgia, Home Depot (NYSE: HD) is a home improvement retailer that sells everything from tools to building materials to appliances.

Why Are We Wary of HD?

1. Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
2. Commoditized inventory, bad unit economics, and high competition are reflected in its low gross margin of 33.5%
3. Free cash flow margin dropped by 2.4 percentage points over the last year, implying the company became more capital intensive as competition picked up

Home Depot’s stock price of $389 implies a valuation ratio of 24.8x forward P/E. Read our free research report to see why you should think twice about including HD in your portfolio.

Matson (MATX)

Trailing 12-Month GAAP Operating Margin: 16.8%

Founded by a Swedish orphan, Matson (NYSE: MATX) is a provider of ocean transportation and logistics services.

Why Are We Hesitant About MATX?

1. Annual revenue growth of 1% over the last two years was below our standards for the industrials sector
2. Sales are projected to tank by 8.6% over the next 12 months as demand evaporates
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

At $93.43 per share, Matson trades at 9.4x forward P/E. If you’re considering MATX for your portfolio, see our FREE research report to learn more.

One Stock to Buy:

KLA Corporation (KLAC)

Trailing 12-Month GAAP Operating Margin: 39.3%

Formed by the 1997 merger of the two leading semiconductor yield management companies, KLA Corporation (NASDAQ: KLAC) is the leading supplier of equipment used to measure and inspect semiconductor chips.

Why Is KLAC a Top Pick?

1. Impressive 15.9% annual revenue growth over the last five years indicates it’s winning market share this cycle
2. Superior product capabilities and pricing power are reflected in its best-in-class gross margin of 60.5%
3. Strong free cash flow margin of 30.9% enables it to reinvest or return capital consistently, and its growing cash flow gives it even more resources to deploy

KLA Corporation is trading at $1,117 per share, or 31.8x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.

High-Quality Stocks for All Market Conditions

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 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 Kadant (+351% 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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