Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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

Honeywell (HON)

Trailing 12-Month GAAP Operating Margin: 21.3%

Originally founded in 1906 as a thermostat company, Honeywell (NASDAQ: HON) is a multinational conglomerate known for its aerospace systems, building technologies, performance materials, and safety and productivity solutions.

Why Are We Wary of HON?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
2. Earnings growth underperformed the sector average over the last five years as its EPS grew by just 3.5% annually
3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 3.2 percentage points

Honeywell is trading at $237.71 per share, or 22.4x forward P/E. To fully understand why you should be careful with HON, check out our full research report (it’s free).

Privia Health (PRVA)

Trailing 12-Month GAAP Operating Margin: 1.2%

Operating in 13 states and the District of Columbia with over 4,300 providers serving more than 4.8 million patients, Privia Health (NASDAQ: PRVA) is a technology-driven company that helps physicians optimize their practices, improve patient experiences, and transition to value-based care models.

Why Is PRVA Not Exciting?

1. Smaller revenue base of $1.80 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
2. Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
3. Negative returns on capital show that some of its growth strategies have backfired

Privia Health’s stock price of $20.89 implies a valuation ratio of 24.5x forward P/E. Read our free research report to see why you should think twice about including PRVA in your portfolio.

One Stock to Watch:

Wabtec (WAB)

Trailing 12-Month GAAP Operating Margin: 15.9%

Also known as Wabtec, Westinghouse Air Brake Technologies (NYSE: WAB) provides equipment, systems, and related software for the railway industry.

Why Are We Fans of WAB?

1. Existing business lines can expand without risky acquisitions as its organic revenue growth averaged 9.5% over the past two years
2. Operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
3. Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue

At $212.97 per share, Wabtec trades at 24.5x 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

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market 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-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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