Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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

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 are three profitable companies to avoid and some better opportunities instead.

Academy Sports (ASO)

Trailing 12-Month GAAP Operating Margin: 8.3%

Founded in 1938 as a tire shop before expanding into fishing equipment, Academy Sports & Outdoor (NASDAQ: ASO) sells a broad selection of sporting goods but is still known for its outdoor activity merchandise.

Why Are We Wary of ASO?

1. Annual revenue declines of 2.4% over the last three years indicate problems with its market positioning
2. Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
3. Capital intensity has ramped up over the last year as its free cash flow margin decreased by 3.9 percentage points

At $50.08 per share, Academy Sports trades at 8x forward P/E. Read our free research report to see why you should think twice about including ASO in your portfolio.

Keurig Dr Pepper (KDP)

Trailing 12-Month GAAP Operating Margin: 17%

Born out of a 2018 merger between Keurig Green Mountain and Dr Pepper Snapple, Keurig Dr Pepper (NASDAQ: KDP) is a consumer staples powerhouse boasting a portfolio of beverages including sodas, coffees, and juices.

Why Are We Cautious About KDP?

1. Sizable revenue base leads to growth challenges as its 5.8% annual revenue increases over the last three years fell short of other consumer staples companies
2. Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 5.9 percentage points
3. Underwhelming 5.8% return on capital reflects management’s difficulties in finding profitable growth opportunities

Keurig Dr Pepper is trading at $28.17 per share, or 13.2x forward P/E. Dive into our free research report to see why there are better opportunities than KDP.

Astec (ASTE)

Trailing 12-Month GAAP Operating Margin: 8.2%

Inventing the first ever double-barrel hot-mix asphalt plant, Astec (NASDAQ: ASTE) provides machines and equipment for building roads, processing raw materials, and producing concrete.

Why Do We Think Twice About ASTE?

1. Demand cratered as it couldn’t win new orders over the past two years, leading to an average 28.2% decline in its backlog
2. High input costs result in an inferior gross margin of 23.9% that must be offset through higher volumes
3. Negative free cash flow raises questions about the return timeline for its investments

Astec’s stock price of $45.20 implies a valuation ratio of 14.8x forward P/E. If you’re considering ASTE for your portfolio, see our FREE research report to learn more.

High-Quality Stocks for All Market Conditions

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here 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-small-cap company Exlservice (+354% 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.