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".

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 generates reliable profits without sacrificing growth and two that may face some trouble.

Two Stocks to Sell:

Textron (TXT)

Trailing 12-Month GAAP Operating Margin: 8.1%

Listed on the NYSE in 1947, Textron (NYSE: TXT) provides products and services in the aerospace, defense, industrial, and finance sectors.

Why Do We Think Twice About TXT?

1. Sizable revenue base leads to growth challenges as its 2.3% annual revenue increases over the last five years fell short of other industrials companies
2. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
3. Free cash flow margin shrank by 6.9 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive

Textron is trading at $77.02 per share, or 11.9x forward P/E. Dive into our free research report to see why there are better opportunities than TXT.

Masco (MAS)

Trailing 12-Month GAAP Operating Margin: 17.6%

Headquartered just outside of Detroit, MI, Masco (NYSE: MAS) designs and manufactures home-building products such as glass shower doors, decorative lighting, bathtubs, and faucets.

Why Do We Pass on MAS?

1. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
2. Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 1.3%
3. Eroding returns on capital suggest its historical profit centers are aging

Masco’s stock price of $69.29 implies a valuation ratio of 18.7x forward P/E. Read our free research report to see why you should think twice about including MAS in your portfolio.

One Stock to Buy:

Nvidia (NVDA)

Trailing 12-Month GAAP Operating Margin: 58%

Founded in 1993 by Jensen Huang and two former Sun Microsystems engineers, Nvidia (NASDAQ: NVDA) is a leading fabless designer of chips used in gaming, PCs, data centers, automotive, and a variety of end markets.

Why Will NVDA Beat the Market?

1. Annual revenue growth of 140% over the last two years was superb and indicates its market share increased during this cycle
2. Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
3. NVDA is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its recently improved profitability means it has even more resources to invest or distribute

At $182.83 per share, Nvidia trades at 38.8x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.

Stocks We Like Even More

Donald Trump’s April 2025 "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 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 ServiceNow (+178% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% 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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