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. That said, here are three profitable companies to avoid and some better opportunities instead.
Caesars Entertainment (CZR)
Trailing 12-Month GAAP Operating Margin: 20.4%
Formerly Eldorado Resorts, Caesars Entertainment (NASDAQ: CZR) is a global gaming and hospitality company operating numerous casinos, hotels, and resort properties.
Why Are We Cautious About CZR?
- Products and services fail to spark excitement with consumers, as seen in its flat sales over the last two years
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 31.4% annually while its revenue grew
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
Caesars Entertainment is trading at $30.75 per share, or 1.7x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including CZR in your portfolio.
Acushnet (GOLF)
Trailing 12-Month GAAP Operating Margin: 12.1%
Producer of the acclaimed Titleist Pro V1 golf ball, Acushnet (NYSE: GOLF) is a design and manufacturing company specializing in performance-driven golf products.
Why Does GOLF Give Us Pause?
- Annual revenue growth of 2.2% over the last two years was below our standards for the consumer discretionary sector
- Estimated sales growth of 1% for the next 12 months is soft and implies weaker demand
- Low free cash flow margin of 8.9% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
Acushnet’s stock price of $78.36 implies a valuation ratio of 20.9x forward P/E. To fully understand why you should be careful with GOLF, check out our full research report (it’s free).
Owens Corning (OC)
Trailing 12-Month GAAP Operating Margin: 10.1%
Credited with the discovery of fiberglass, Owens Corning (NYSE: OC) supplies building and construction materials to the United States and international markets.
Why Does OC Fall Short?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Estimated sales decline of 6.7% for the next 12 months implies a challenging demand environment
- Free cash flow margin shrank by 4.8 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
At $144.05 per share, Owens Corning trades at 9.7x forward P/E. Dive into our free research report to see why there are better opportunities than OC.
Stocks We Like More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio 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 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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