Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.

Profits are valuable, but they’re not everything. At StockStory, we help you identify the companies that have real staying power. That said, here is one profitable company that generates reliable profits without sacrificing growth and two best left off your watchlist.

Two Stocks to Sell:

Hyster-Yale Materials Handling (HY)

Trailing 12-Month GAAP Operating Margin: 2.1%

Playing a significant role in the development of the hydraulic lift truck, Hyster-Yale (NYSE: HY) designs, manufactures, and sells materials handling equipment to various sectors.

Why Is HY Risky?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 2% annually over the last two years
2. Sales are projected to tank by 6.4% over the next 12 months as its demand continues evaporating
3. Issuance of new shares over the last five years caused its earnings per share to fall by 2.6% annually while its revenue grew

At $27.32 per share, Hyster-Yale Materials Handling trades at 10.8x forward EV-to-EBITDA. To fully understand why you should be careful with HY, check out our full research report (it’s free for active Edge members).

Knowles (KN)

Trailing 12-Month GAAP Operating Margin: 12.3%

With roots dating back to 1946 and a focus on components that must perform flawlessly in critical situations, Knowles (NYSE: KN) designs and manufactures specialized electronic components like high-performance capacitors, microphones, and speakers for medical technology, defense, and industrial applications.

Why Are We Out on KN?

1. Sales tumbled by 3.7% annually over the last five years, showing market trends are working against its favor during this cycle
2. Revenue base of $573.5 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
3. Low returns on capital reflect management’s struggle to allocate funds effectively, and its falling returns suggest its earlier profit pools are drying up

Knowles is trading at $21.13 per share, or 17.5x forward P/E. Dive into our free research report to see why there are better opportunities than KN.

One Stock to Buy:

Houlihan Lokey (HLI)

Trailing 12-Month GAAP Operating Margin: 20.1%

Founded in 1972 and known for its expertise in complex financial situations, Houlihan Lokey (NYSE: HLI) is a global investment bank specializing in mergers and acquisitions, capital markets, financial restructurings, and valuation advisory services.

Why Are We Backing HLI?

1. Annual revenue growth of 19.9% over the past two years was outstanding, reflecting market share gains this cycle
2. Additional sales over the last two years increased its profitability as the 33.5% annual growth in its earnings per share outpaced its revenue
3. Impressive 42.9% annual tangible book value per share growth over the last two years indicates it’s building equity value this cycle

Houlihan Lokey’s stock price of $172.02 implies a valuation ratio of 21.4x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free for active Edge members.

High-Quality Stocks for All Market Conditions

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our 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 244% over the last five years (as of June 30, 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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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