Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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. Keeping that in mind, here is one profitable company that leverages its financial strength to beat the competition and two that may face some trouble.

Two Stocks to Sell:

Bright Horizons (BFAM)

Trailing 12-Month GAAP Operating Margin: 9.9%

Founded in 1986, Bright Horizons (NYSE: BFAM) is a global provider of child care, early education, and workforce support solutions.

Why Do We Steer Clear of BFAM?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
2. Earnings per share were flat over the last five years while its revenue grew, showing its incremental sales were less profitable
3. ROIC of 4.3% reflects management’s challenges in identifying attractive investment opportunities

At $124.84 per share, Bright Horizons trades at 29.9x forward P/E. Check out our free in-depth research report to learn more about why BFAM doesn’t pass our bar.

Werner (WERN)

Trailing 12-Month GAAP Operating Margin: 1.5%

Conducting business in over a 100 countries, Werner (NASDAQ: WERN) offers full-truckload, less-than-truckload, and intermodal delivery services.

Why Is WERN Risky?

1. Sales tumbled by 5.9% annually over the last two years, showing market trends are working against its favor during this cycle
2. Incremental sales over the last five years were much less profitable as its earnings per share fell by 34.2% annually while its revenue grew
3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

Werner’s stock price of $27.46 implies a valuation ratio of 22.7x forward P/E. To fully understand why you should be careful with WERN, check out our full research report (it’s free).

One Stock to Buy:

Shopify (SHOP)

Trailing 12-Month GAAP Operating Margin: 12.7%

Originally created as an internal tool for a snowboarding company, Shopify (NYSE: SHOP) provides a software platform for building and operating e-commerce businesses.

Why Will SHOP Beat the Market?

1. Payment activity on its platform is soaring as its TPV growth averaged 31.7% over the last year, enabling the company to collect more fees and upsell additional services like banking
2. Software platform has product-market fit given the rapid recovery of its customer acquisition costs
3. Operating margin improvement of 28.1 percentage points over the last year demonstrates its ability to scale efficiently

Shopify is trading at $114.06 per share, or 13x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 9 Market-Beating Stocks. 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.