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 leverages its financial strength to beat the competition and two that may face some trouble.
Two Stocks to Sell:
Sensata Technologies (ST)
Trailing 12-Month GAAP Operating Margin: 3.6%
Originally a temperature sensor control maker and a subsidiary of Texas Instruments for 60 years, Sensata Technology Holdings (NYSE: ST) is a leading supplier of analog sensors used in industrial and transportation applications, best known for its dominant position in the tire pressure monitoring systems in cars.
Why Should You Sell ST?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 4.3% annually over the last two years
- Estimated sales for the next 12 months are flat and imply a softer demand environment
- Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 13 percentage points
Sensata Technologies is trading at $32.24 per share, or 9.4x forward P/E. Check out our free in-depth research report to learn more about why ST doesn’t pass our bar.
NCR Atleos (NATL)
Trailing 12-Month GAAP Operating Margin: 11.4%
Spun off from NCR Voyix in 2023 to focus exclusively on self-service banking technology, NCR Atleos (NYSE: NATL) provides self-directed banking solutions including ATM and interactive teller machine technology, software, services, and a surcharge-free ATM network for financial institutions and retailers.
Why Are We Out on NATL?
- 1.8% annual revenue growth over the last two years was slower than its financials peers
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 11.8% annually
At $39.77 per share, NCR Atleos trades at 9x forward P/E. Dive into our free research report to see why there are better opportunities than NATL.
One Stock to Watch:
W.W. Grainger (GWW)
Trailing 12-Month GAAP Operating Margin: 15.3%
Founded as a supplier of motors, W.W. Grainger (NYSE: GWW) provides maintenance, repair, and operating (MRO) supplies and services to businesses and institutions.
Why Do We Like GWW?
- Operating margin expanded by 4.2 percentage points over the last five years as it scaled and became more efficient
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Industry-leading 36.7% return on capital demonstrates management’s skill in finding high-return investments, and its returns are climbing as it finds even more attractive growth opportunities
W.W. Grainger’s stock price of $1,028 implies a valuation ratio of 24x forward P/E. Is now a good time to buy? See for yourself in our in-depth 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 6 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 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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