Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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

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 steer clear of and a few better alternatives.

Mattel (MAT)

Trailing 12-Month GAAP Operating Margin: 11.6%

Known for the creation of iconic toys such as Barbie and Hotwheels, Mattel (NASDAQ: MAT) is a global children's entertainment company specializing in the design and production of consumer products.

Why Are We Hesitant About MAT?

1. Sales were flat over the last two years, indicating it’s failed to expand its business
2. Estimated sales growth of 6.8% for the next 12 months is soft and implies weaker demand
3. Diminishing returns on capital suggest its earlier profit pools are drying up

Mattel’s stock price of $19.21 implies a valuation ratio of 11.3x forward P/E. If you’re considering MAT for your portfolio, see our FREE research report to learn more.

Old Dominion Freight Line (ODFL)

Trailing 12-Month GAAP Operating Margin: 24.9%

With its name deriving from the Commonwealth of Virginia’s nickname, Old Dominion (NASDAQ: ODFL) delivers less-than-truckload (LTL) and full-container load freight.

Why Are We Wary of ODFL?

1. Declining unit sales over the past two years imply it may need to invest in improvements to get back on track
2. Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

Old Dominion Freight Line is trading at $132.24 per share, or 27.9x forward P/E. To fully understand why you should be careful with ODFL, check out our full research report (it’s free for active Edge members).

Lennar (LEN)

Trailing 12-Month GAAP Operating Margin: 9.7%

One of the largest homebuilders in America, Lennar (NYSE: LEN) is known for constructing affordable, move-up, and retirement homes across a range of markets and communities.

Why Do We Think LEN Will Underperform?

1. Demand cratered as it couldn’t win new orders over the past two years, leading to an average 19.2% decline in its backlog
2. Incremental sales over the last two years were much less profitable as its earnings per share fell by 15.2% annually while its revenue grew
3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 11.9 percentage points

At $121.51 per share, Lennar trades at 14.3x forward P/E. Dive into our free research report to see why there are better opportunities than LEN.

High-Quality Stocks for All Market Conditions

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here in 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 244% over the last five years (as of June 30, 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.