Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.
A business making money today isn’t necessarily a winner, which is why we analyze companies across multiple dimensions at StockStory. That said, here is one profitable company that leverages its financial strength to beat the competition and two that may struggle to keep up.
Two Stocks to Sell:
Energizer (ENR)
Trailing 12-Month GAAP Operating Margin: 15.5%
Masterminds behind the viral Energizer Bunny mascot, Energizer (NYSE: ENR) is one of the world's largest manufacturers of batteries.
Why Should You Sell ENR?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- 9.3 percentage point decline in its free cash flow margin over the last year reflects the company’s increased investments to defend its market position
- 5× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
At $18.20 per share, Energizer trades at 5.4x forward P/E. Check out our free in-depth research report to learn more about why ENR doesn’t pass our bar.
The Honest Company (HNST)
Trailing 12-Month GAAP Operating Margin: 1.2%
Co-founded by actress Jessica Alba, The Honest Company (NASDAQ: HNST) sells diapers and wipes, skin care products, and household cleaning products.
Why Do We Avoid HNST?
- Subscale operations are evident in its revenue base of $383.1 million, meaning it has fewer distribution channels than its larger rivals
- Free cash flow margin dropped by 13.2 percentage points over the last year, implying the company became more capital intensive as competition picked up
- Push for growth has led to negative returns on capital, signaling value destruction
The Honest Company’s stock price of $2.82 implies a valuation ratio of 23.9x forward P/E. If you’re considering HNST for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
CSW (CSW)
Trailing 12-Month GAAP Operating Margin: 19.6%
With over two centuries of combined operations manufacturing and supplying, CSW (NASDAQ: CSW) offers special chemicals, coatings, sealants, and lubricants for various industries.
Why Is CSW a Top Pick?
- Market share has increased this cycle as its 20.6% annual revenue growth over the last five years was exceptional
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 17.8% outpaced its revenue gains
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its recently improved profitability means it has even more resources to invest or distribute
CSW is trading at $300.39 per share, or 26.8x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
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 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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