Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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

Calavo (CVGW)

Trailing 12-Month GAAP Operating Margin: 3.6%

A trailblazer in the avocado industry, Calavo Growers (NASDAQ: CVGW) is a pioneering California-based provider of high-quality avocados and other fresh food products.

Why Is CVGW Risky?

1. Annual sales declines of 15.8% for the past three years show its products struggled to connect with the market
2. Projected sales decline of 1.8% over the next 12 months indicates demand will continue deteriorating
3. Gross margin of 10.5% is an output of its commoditized products

Calavo’s stock price of $26.25 implies a valuation ratio of 13.8x forward P/E. Dive into our free research report to see why there are better opportunities than CVGW.

Rogers (ROG)

Trailing 12-Month GAAP Operating Margin: 5.3%

With roots dating back to 1832, making it one of America's oldest continuously operating companies, Rogers (NYSE: ROG) designs and manufactures specialized engineered materials and components used in electric vehicles, telecommunications, renewable energy, and other high-performance applications.

Why Do We Think ROG Will Underperform?

1. Annual sales declines of 1.2% for the past five years show its products and services struggled to connect with the market during this cycle
2. Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 13.7% annually, worse than its revenue
3. Free cash flow margin dropped by 12.5 percentage points over the last five years, implying the company became more capital intensive as competition picked up

At $64.78 per share, Rogers trades at 24.6x forward P/E. To fully understand why you should be careful with ROG, check out our full research report (it’s free).

One Stock to Watch:

Target Hospitality (TH)

Trailing 12-Month GAAP Operating Margin: 22.1%

Building mini-communities at places such as oil drilling sites, Target Hospitality (NASDAQ: TH) is a provider of specialty workforce lodging accommodations and services.

Why Are We Fans of TH?

1. Healthy operating margin of 32.8% shows it’s a well-run company with efficient processes
2. Strong free cash flow margin of 24.5% enables it to reinvest or return capital consistently
3. Improving returns on capital reflect management’s ability to monetize investments

Target Hospitality is trading at $7.39 per share, or 22.7x forward EV-to-EBITDA. 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

Donald Trump’s April 2024 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out 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 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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