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. 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:
Genuine Parts (GPC)
Trailing 12-Month GAAP Operating Margin: 4.9%
Largely targeting the professional customer, Genuine Parts (NYSE: GPC) sells auto and industrial parts such as batteries, belts, bearings, and machine fluids.
Why Are We Cautious About GPC?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 4.7% over the last six years was below our standards for the consumer retail sector
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Free cash flow margin shrank by 3.4 percentage points over the last year, suggesting the company is consuming more capital to stay competitive
Genuine Parts’s stock price of $133.68 implies a valuation ratio of 16.4x forward P/E. Dive into our free research report to see why there are better opportunities than GPC.
D.R. Horton (DHI)
Trailing 12-Month GAAP Operating Margin: 14.2%
One of the largest homebuilding companies in the U.S., D.R. Horton (NYSE: DHI) builds a variety of new construction homes across multiple markets.
Why Are We Wary of DHI?
- Backlog has dropped by 17% on average over the past two years, suggesting it’s losing orders as competition picks up
- Earnings per share have dipped by 5.8% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
D.R. Horton is trading at $159.53 per share, or 13.3x forward P/E. If you’re considering DHI for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
Primerica (PRI)
Trailing 12-Month GAAP Operating Margin: 29.4%
With a sales force of over 140,000 licensed representatives operating on an independent contractor model, Primerica (NYSE: PRI) provides term life insurance, investment products, and other financial services to middle-income households in the United States and Canada.
Why Does PRI Catch Our Eye?
- Pre-tax profit margin improvement of 6 percentage points over the last four years demonstrates its ability to scale efficiently
- Share repurchases over the last five years enabled its annual earnings per share growth of 18.2% to outpace its revenue gains
- Industry-leading 26.7% return on equity demonstrates management’s skill in finding high-return investments
At $269.82 per share, Primerica trades at 3.6x forward P/B. Is now the time to initiate a position? See for yourself in our comprehensive 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 6 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 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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