While profitability is essential, it doesn’t guarantee long-term success. Some companies that rest on their margins will lose ground as competition intensifies - as Jeff Bezos said, "Your margin is my opportunity".
Profits are valuable, but they’re not everything. At StockStory, we help you identify the companies that have real staying power. That said, here is one profitable company that balances growth and profitability and two best left off your watchlist.
Two Stocks to Sell:
Clorox (CLX)
Trailing 12-Month GAAP Operating Margin: 14.9%
Founded in 1913 with bleach as the sole product offering, Clorox (NYSE: CLX) today is a consumer products giant whose product portfolio spans everything from bleach to skincare to salad dressing to kitty litter.
Why Is CLX Not Exciting?
- Sales were flat over the last three years, indicating it’s failed to expand its business
- Projected sales decline of 2% for the next 12 months points to an even tougher demand environment ahead
Clorox’s stock price of $124.50 implies a valuation ratio of 17.1x forward P/E. Check out our free in-depth research report to learn more about why CLX doesn’t pass our bar.
Sherwin-Williams (SHW)
Trailing 12-Month GAAP Operating Margin: 16.7%
Widely known for its success in the paint industry, Sherwin-Williams (NYSE: SHW) is a manufacturer of paints, coatings, and related products.
Why Does SHW Give Us Pause?
- 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
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 2.4%
- 8.5 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
Sherwin-Williams is trading at $338 per share, or 27.6x forward P/E. Dive into our free research report to see why there are better opportunities than SHW.
One Stock to Watch:
CECO Environmental (CECO)
Trailing 12-Month GAAP Operating Margin: 14.7%
With roots dating back to 1869 and a focus on creating cleaner industrial operations, CECO Environmental (NASDAQ: CECO) provides technology and expertise that helps industrial companies reduce emissions, treat water, and improve energy efficiency across various sectors.
Why Are We Fans of CECO?
- Impressive 17.2% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Exciting sales outlook for the upcoming 12 months calls for 22.6% growth, an acceleration from its two-year trend
- Adjusted operating margin profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
At $30.05 per share, CECO Environmental trades at 23.3x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even 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 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
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