While profitability is essential, it doesn’t guarantee long-term success. Some companies that rest on their margins will lose ground as competition intensifies - as Jeff Bezos said, "Your margin is my opportunity".
Not all profitable companies are created equal, and that’s why we built StockStory - to help you find the ones that truly shine bright. 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:
The Toro Company (TTC)
Trailing 12-Month GAAP Operating Margin: 9.4%
Ceasing all production to support the war effort during World War II, Toro (NYSE: TTC) offers outdoor equipment for residential, commercial, and agricultural use.
Why Do We Avoid TTC?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 2.4% annually over the last two years
- 5.6 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
- Eroding returns on capital suggest its historical profit centers are aging
The Toro Company is trading at $74.21 per share, or 16.2x forward P/E. Check out our free in-depth research report to learn more about why TTC doesn’t pass our bar.
Winnebago (WGO)
Trailing 12-Month GAAP Operating Margin: 2%
Created to provide high-quality, affordable RVs to the post-war American family, Winnebago (NYSE: WGO) is a manufacturer of recreational vehicles, providing a range of motorhomes, travel trailers, and fifth-wheel products for outdoor and adventure lifestyles.
Why Is WGO Risky?
- Annual sales declines of 10.5% for the past two years show its products and services struggled to connect with the market during this cycle
- Earnings per share fell by 8.3% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Diminishing returns on capital suggest its earlier profit pools are drying up
Winnebago’s stock price of $35.85 implies a valuation ratio of 15.5x forward P/E. Dive into our free research report to see why there are better opportunities than WGO.
One Stock to Watch:
Stryker (SYK)
Trailing 12-Month GAAP Operating Margin: 15%
With over 150 million patients impacted annually through its innovative healthcare technologies, Stryker (NYSE: SYK) develops and manufactures advanced medical devices and equipment across orthopedics, surgical tools, neurotechnology, and patient care solutions.
Why Does SYK Stand Out?
- Average organic revenue growth of 10.2% over the past two years demonstrates its ability to expand independently without relying on acquisitions
- $24.38 billion in revenue gives its scale, which leads to bargaining power with customers because there are few trusted alternatives
- Earnings per share grew by 13.1% annually over the last five years, massively outpacing its peers
At $356.88 per share, Stryker trades at 24.7x forward P/E. Is now a good time to buy? 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 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 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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