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. That said, here is one profitable company that generates reliable profits without sacrificing growth and two that may face some trouble.

Two Stocks to Sell:

Dollar General (DG)

Trailing 12-Month GAAP Operating Margin: 4.5%

Appealing to the budget-conscious consumer, Dollar General (NYSE: DG) is a discount retailer that sells a wide range of household essentials, groceries, apparel/beauty products, and seasonal merchandise.

Why Does DG Worry Us?

1. Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
2. Widely-available products (and therefore stiff competition) result in an inferior gross margin of 30% that must be offset through higher volumes
3. Earnings per share have dipped by 17.4% annually over the past three years, which is concerning because stock prices follow EPS over the long term

Dollar General’s stock price of $132.55 implies a valuation ratio of 19.3x forward P/E. Read our free research report to see why you should think twice about including DG in your portfolio.

Concrete Pumping (BBCP)

Trailing 12-Month GAAP Operating Margin: 11.1%

Going public via SPAC in 2018, Concrete Pumping (NASDAQ: BBCP) is a provider of concrete pumping and waste management services in the United States and the United Kingdom.

Why Should You Dump BBCP?

1. Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
2. Earnings per share have contracted by 37.7% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
3. Free cash flow margin dropped by 7.8 percentage points over the last five years, implying the company became more capital intensive as competition picked up

Concrete Pumping is trading at $6.71 per share, or 51.6x forward P/E. Dive into our free research report to see why there are better opportunities than BBCP.

One Stock to Watch:

CRA (CRAI)

Trailing 12-Month GAAP Operating Margin: 11.5%

Often retained for high-stakes matters with multibillion-dollar implications, CRA International (NASDAQ: CRAI) provides economic, financial, and management consulting services to corporations, law firms, and government agencies for litigation, regulatory proceedings, and business strategy.

Why Could CRAI Be a Winner?

1. Annual revenue growth of 9.7% over the last two years was superb and indicates its market share increased during this cycle
2. Share repurchases over the last two years enabled its annual earnings per share growth of 27.6% to outpace its revenue gains
3. Stellar returns on capital showcase management’s ability to surface highly profitable business ventures

At $200.70 per share, CRA trades at 23x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.

High-Quality Stocks for All Market Conditions

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