ETFOptimize | High-performance ETF-based Investment Strategies

Quantitative strategies, Wall Street-caliber research, and insightful market analysis since 1998.


ETFOptimize | HOME
Close Window

3 Profitable Stocks with Open Questions

MCW Cover Image

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".

Not all profitable companies are created equal, and that’s why we built StockStory - to help you find the ones that truly shine bright. That said, here are three profitable companies to steer clear of and a few better alternatives.

Mister Car Wash (MCW)

Trailing 12-Month GAAP Operating Margin: 18.6%

Formerly known as Hotshine Holdings, Mister Car Wash (NYSE: MCW) offers car washes across the United States through its conveyorized service.

Why Do We Steer Clear of MCW?

  1. Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its stores
  2. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
  3. Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution

At $6.45 per share, Mister Car Wash trades at 14.2x forward P/E. Read our free research report to see why you should think twice about including MCW in your portfolio.

Chemed (CHE)

Trailing 12-Month GAAP Operating Margin: 15.6%

With a unique business model combining end-of-life care and household services, Chemed (NYSE: CHE) operates two distinct businesses: VITAS, which provides hospice care for terminally ill patients, and Roto-Rooter, which offers plumbing and water restoration services.

Why Does CHE Fall Short?

  1. Sales trends were unexciting over the last five years as its 4.6% annual growth was below the typical healthcare company
  2. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 8.9 percentage points
  3. Eroding returns on capital suggest its historical profit centers are aging

Chemed’s stock price of $473.18 implies a valuation ratio of 18.3x forward P/E. Check out our free in-depth research report to learn more about why CHE doesn’t pass our bar.

SS&C (SSNC)

Trailing 12-Month GAAP Operating Margin: 23%

Founded in 1986 as a bridge between technology and financial services, SS&C Technologies (NASDAQ: SSNC) provides software and software-enabled services that help financial firms and healthcare organizations automate complex business processes.

Why Are We Cautious About SSNC?

  1. Annual revenue growth of 4.9% over the last five years was below our standards for the business services sector
  2. Free cash flow margin shrank by 3 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
  3. Below-average returns on capital indicate management struggled to find compelling investment opportunities

SS&C is trading at $82.14 per share, or 13.8x forward P/E. To fully understand why you should be careful with SSNC, check out our full research report (it’s free).

High-Quality Stocks for All Market Conditions

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

Stock Quote API & Stock News API supplied by www.cloudquote.io
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms Of Service.


 

IntelligentValue Home
Close Window

DISCLAIMER

All content herein is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor should it be interpreted as a recommendation to buy, hold or sell (short or otherwise) any security.  All opinions, analyses, and information included herein are based on sources believed to be reliable, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. We undertake no obligation to update such opinions, analysis or information. You should independently verify all information contained on this website. Some information is based on analysis of past performance or hypothetical performance results, which have inherent limitations. We make no representation that any particular equity or strategy will or is likely to achieve profits or losses similar to those shown. Shareholders, employees, writers, contractors, and affiliates associated with ETFOptimize.com may have ownership positions in the securities that are mentioned. If you are not sure if ETFs, algorithmic investing, or a particular investment is right for you, you are urged to consult with a Registered Investment Advisor (RIA). Neither this website nor anyone associated with producing its content are Registered Investment Advisors, and no attempt is made herein to substitute for personalized, professional investment advice. Neither ETFOptimize.com, Global Alpha Investments, Inc., nor its employees, service providers, associates, or affiliates are responsible for any investment losses you may incur as a result of using the information provided herein. Remember that past investment returns may not be indicative of future returns.

Copyright © 1998-2017 ETFOptimize.com, a publication of Optimized Investments, Inc. All rights reserved.