Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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

Strategic Education (STRA)

Trailing 12-Month GAAP Operating Margin: 12.7%

Formed through the merger of Strayer Education and Capella Education in 2018, Strategic Education (NASDAQ: STRA) is a career-focused higher education provider.

Why Do We Think STRA Will Underperform?

1. Sluggish trends in its domestic students suggest customers aren’t adopting its solutions as quickly as the company hoped
2. Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 7.1% annually
3. Low returns on capital reflect management’s struggle to allocate funds effectively

Strategic Education is trading at $83.05 per share, or 13.7x forward P/E. To fully understand why you should be careful with STRA, check out our full research report (it’s free).

Haemonetics (HAE)

Trailing 12-Month GAAP Operating Margin: 17.5%

With roots dating back to 1971 and a mission to improve blood-related healthcare, Haemonetics (NYSE: HAE) provides specialized medical devices and software for blood collection, processing, and management across plasma centers, blood banks, and hospitals.

Why Are We Wary of HAE?

1. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
2. Revenue base of $1.35 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale
3. Estimated sales decline of 2.9% for the next 12 months implies a challenging demand environment

At $51.15 per share, Haemonetics trades at 10.2x forward P/E. Read our free research report to see why you should think twice about including HAE in your portfolio.

One Stock to Buy:

Monolithic Power Systems (MPWR)

Trailing 12-Month GAAP Operating Margin: 26%

Founded in 1997 by its longtime CEO Michael Hsing, Monolithic Power Systems (NASDAQ: MPWR) is an analog and mixed signal chipmaker that specializes in power management chips meant to minimize total energy consumption.

Why Are We Bullish on MPWR?

1. Annual revenue growth of 29.9% over the last five years was superb and indicates its market share increased during this cycle
2. Strong free cash flow margin of 30.3% enables it to reinvest or return capital consistently, and its improved cash conversion implies it’s becoming a less capital-intensive business
3. ROIC punches in at 45.9%, illustrating management’s expertise in identifying profitable investments

Monolithic Power Systems’s stock price of $919.36 implies a valuation ratio of 51.5x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.

Stocks We Like Even More

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking 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 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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