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. Keeping that in mind, here are three profitable companies to avoid and some better opportunities instead.
Pangaea (PANL)
Trailing 12-Month GAAP Operating Margin: 6.4%
Established in 1996, Pangaea Logistics (NASDAQ: PANL) specializes in global logistics and transportation services, focusing on the shipment of dry bulk cargoes.
Why Are We Cautious About PANL?
- Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 19.1%
- Earnings per share have dipped by 33.6% annually over the past four years, which is concerning because stock prices follow EPS over the long term
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
Pangaea is trading at $7.15 per share, or 6.8x forward P/E. Read our free research report to see why you should think twice about including PANL in your portfolio.
Thermo Fisher (TMO)
Trailing 12-Month GAAP Operating Margin: 17.2%
With over 14,000 sales personnel and a portfolio spanning more than 2,500 technology manufacturers, Thermo Fisher Scientific (NYSE: TMO) provides scientific equipment, reagents, consumables, software, and laboratory services to pharmaceutical, biotech, academic, and healthcare customers worldwide.
Why Does TMO Fall Short?
- Sales stagnated over the last two years and signal the need for new growth strategies
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Costs have risen faster than its revenue over the last five years, causing its adjusted operating margin to decline by 9.2 percentage points
Thermo Fisher’s stock price of $574.63 implies a valuation ratio of 24x forward P/E. Check out our free in-depth research report to learn more about why TMO doesn’t pass our bar.
State Street (STT)
Trailing 12-Month GAAP Operating Margin: 29.1%
Dating back to 1792 when Boston's Long Wharf was the center of global shipping and trade, State Street (NYSE: STT) provides custody, investment management, and other financial services to institutional investors like pension funds, asset managers, and central banks worldwide.
Why Are We Hesitant About STT?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 3.1% for the last five years
- Earnings growth underperformed the sector average over the last five years as its EPS grew by just 7.3% annually
At $127.67 per share, State Street trades at 11.7x forward P/E. If you’re considering STT for your portfolio, see our FREE research report to learn more.
Stocks We Like More
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 Strong Momentum Stocks for this week. 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 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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