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".

Not all profitable companies are created equal, and that’s why we built StockStory - to help you find the ones that truly shine bright. That said, here are three profitable companies to avoid and some better opportunities instead.

Agilysys (AGYS)

Trailing 12-Month GAAP Operating Margin: 7.4%

With a tech stack that powers everything from check-in to checkout at some of the world's top hospitality venues, Agilysys (NASDAQ: AGYS) develops and provides cloud-based and on-premise software solutions for hotels, resorts, casinos, and restaurants to manage operations and enhance guest experiences.

Why Are We Cautious About AGYS?

1. Sales trends were unexciting over the last three years as its 19% annual growth was below the typical software company
2. Gross margin of 62.1% is below its competitors, leaving less money to invest in areas like marketing and R&D

Agilysys’s stock price of $110.53 implies a valuation ratio of 9.7x forward price-to-sales. To fully understand why you should be careful with AGYS, check out our full research report (it’s free).

Pangaea (PANL)

Trailing 12-Month GAAP Operating Margin: 6.3%

Established in 1996, Pangaea Logistics (NASDAQ: PANL) specializes in global logistics and transportation services, focusing on the shipment of dry bulk cargoes.

Why Are We Wary of PANL?

1. Annual revenue growth of 3.2% over the last two years was below our standards for the industrials sector
2. Revenue growth over the past two years was nullified by the company’s new share issuances as its earnings per share fell by 41.1% annually
3. Low free cash flow margin of 0.3% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders

Pangaea is trading at $5.38 per share, or 9.9x forward P/E. Dive into our free research report to see why there are better opportunities than PANL.

Dell (DELL)

Trailing 12-Month GAAP Operating Margin: 6.7%

Founded by Michael Dell in his University of Texas dorm room in 1984 with just $1,000, Dell Technologies (NYSE: DELL) provides hardware, software, and services that help organizations build their IT infrastructure, manage cloud environments, and enable digital transformation.

Why Are We Hesitant About DELL?

1. Flat sales over the last two years suggest it must find different ways to grow during this cycle
2. Underwhelming ARR growth of 5% suggests the company faced challenges in acquiring and retaining long-term customers
3. Free cash flow margin dropped by 9.9 percentage points over the last five years, implying the company became more capital intensive as competition picked up

At $131.30 per share, Dell trades at 13.5x forward P/E. Check out our free in-depth research report to learn more about why DELL doesn’t pass our bar.

High-Quality Stocks for All Market Conditions

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 Kadant (+351% 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

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.