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 are three profitable companies that don’t make the cut and some better opportunities instead.
Macy's (M)
Trailing 12-Month GAAP Operating Margin: 3.6%
With a storied history that began with its 1858 founding, Macy’s (NYSE: M) is a department store chain that sells clothing, cosmetics, accessories, and home goods.
Why Should You Sell M?
- Store closures and poor same-store sales reveal weak demand and a push toward operational efficiency
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
- Projected sales decline of 4% over the next 12 months indicates demand will continue deteriorating
At $16.92 per share, Macy's trades at 9.3x forward P/E. To fully understand why you should be careful with M, check out our full research report (it’s free).
Gilead Sciences (GILD)
Trailing 12-Month GAAP Operating Margin: 27.9%
From its groundbreaking work in developing the first single-tablet regimens for HIV treatment, Gilead Sciences (NASDAQ: GILD) develops and markets innovative medicines for life-threatening diseases including HIV, viral hepatitis, COVID-19, and cancer.
Why Is GILD Not Exciting?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 2.7% over the last two years was below our standards for the healthcare sector
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 2.3%
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Gilead Sciences is trading at $112.20 per share, or 13.6x forward P/E. Dive into our free research report to see why there are better opportunities than GILD.
DaVita (DVA)
Trailing 12-Month GAAP Operating Margin: 15.8%
With over 2,600 dialysis centers across the United States and a presence in 13 countries, DaVita (NYSE: DVA) operates a network of dialysis centers providing treatment and care for patients with chronic kidney disease and end-stage kidney disease.
Why Does DVA Give Us Pause?
- Sizable revenue base leads to growth challenges as its 2.7% annual revenue increases over the last five years fell short of other healthcare companies
- Flat treatments over the past two years indicate demand is soft and that the company may need to revise its strategy
- Estimated sales growth of 3.4% for the next 12 months implies demand will slow from its two-year trend
DaVita’s stock price of $131.15 implies a valuation ratio of 11.2x forward P/E. Read our free research report to see why you should think twice about including DVA in your portfolio.
Stocks We Like 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.
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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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