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.
A business making money today isn’t necessarily a winner, which is why we analyze companies across multiple dimensions at StockStory. That said, 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:
McCormick (MKC)
Trailing 12-Month GAAP Operating Margin: 15.7%
The classic red Heinz ketchup bottle’s competitor, McCormick (NYSE: MKC) sells food-flavoring products like condiments, spices, and seasoning mixes.
Why Are We Wary of MKC?
- Lackluster 2.1% annual revenue growth over the last three years indicates the company is losing ground to competitors
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Free cash flow margin dropped by 1.9 percentage points over the last year, implying the company became more capital intensive as competition picked up
McCormick’s stock price of $63.71 implies a valuation ratio of 20.5x forward P/E. If you’re considering MKC for your portfolio, see our FREE research report to learn more.
Privia Health (PRVA)
Trailing 12-Month GAAP Operating Margin: 1%
Operating in 13 states and the District of Columbia with over 4,300 providers serving more than 4.8 million patients, Privia Health (NASDAQ: PRVA) is a technology-driven company that helps physicians optimize their practices, improve patient experiences, and transition to value-based care models.
Why Is PRVA Not Exciting?
- Modest revenue base of $1.9 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- Poor free cash flow margin of 4.3% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Negative returns on capital show that some of its growth strategies have backfired
Privia Health is trading at $24.30 per share, or 26.6x forward P/E. Dive into our free research report to see why there are better opportunities than PRVA.
One Stock to Buy:
EXL (EXLS)
Trailing 12-Month GAAP Operating Margin: 15.1%
Originally founded as an outsourcing company in 1999 before evolving into a technology-focused enterprise, EXL (NASDAQ: EXLS) provides data analytics and AI-powered digital operations solutions that help businesses transform their operations and make better decisions.
Why Do We Love EXLS?
- Impressive 16% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Share repurchases over the last five years enabled its annual earnings per share growth of 24.4% to outpace its revenue gains
- Robust free cash flow margin of 11.7% gives it many options for capital deployment
At $39.63 per share, EXL trades at 19.3x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound 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
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