Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.
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 that may face some trouble.
Two Stocks to Sell:
MGP Ingredients (MGPI)
Trailing 12-Month GAAP Operating Margin: 3.6%
Headquartered in Atchison, Kansas, MGP Ingredients (NASDAQ: MGPI) is a leading supplier of high-quality ingredients to the food and beverage industry
Why Do We Avoid MGPI?
- Annual revenue declines of 6% over the last three years indicate problems with its market positioning
- Sales are projected to tank by 15.8% over the next 12 months as its demand continues evaporating
- Inability to adjust its cost structure while its revenue declined over the last year led to a 13.6 percentage point drop in the company’s operating margin
MGP Ingredients is trading at $28.97 per share, or 11.1x forward P/E. To fully understand why you should be careful with MGPI, check out our full research report (it’s free).
Disney (DIS)
Trailing 12-Month GAAP Operating Margin: 15.1%
Founded by brothers Walt and Roy, Disney (NYSE: DIS) is a multinational entertainment conglomerate, renowned for its theme parks, movies, television networks, and merchandise.
Why Should You Dump DIS?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 3.8% over the last two years was below our standards for the consumer discretionary sector
- Capital intensity will likely ramp up in the next year as its free cash flow margin is expected to contract by 4 percentage points
- Low returns on capital reflect management’s struggle to allocate funds effectively
At $116.21 per share, Disney trades at 19.4x forward P/E. Check out our free in-depth research report to learn more about why DIS doesn’t pass our bar.
One Stock to Watch:
RBC Bearings (RBC)
Trailing 12-Month GAAP Operating Margin: 22.4%
With a Guinness World Record for engineering the largest spherical plain bearing, RBC Bearings (NYSE: RBC) is a manufacturer of bearings and related components for the aerospace & defense, industrial, and transportation industries.
Why Is RBC on Our Radar?
- Impressive 18.9% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Demand for the next 12 months is expected to accelerate above its two-year trend as Wall Street forecasts robust revenue growth of 14.5%
- Disciplined cost controls and effective management resulted in a strong long-term operating margin of 20.2%, and its rise over the last five years was fueled by some leverage on its fixed costs
RBC Bearings’s stock price of $390.52 implies a valuation ratio of 32.9x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at 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-small-cap company Comfort Systems (+782% 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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