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 that don’t make the cut and some better opportunities instead.

VeriSign (VRSN)

Trailing 12-Month GAAP Operating Margin: 67.6%

As the silent guardian of the internet's roadmap, VeriSign (NASDAQ: VRSN) operates the authoritative registry for .com and .net domain names, enabling websites to be found reliably when users type web addresses.

Why Are We Wary of VRSN?

1. 4.8% annual revenue growth over the last two years was slower than its software peers
2. Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 4.9%
3. Operating margin didn’t move over the last year, showing it couldn’t increase its efficiency

VeriSign’s stock price of $250.00 implies a valuation ratio of 13.7x forward price-to-sales. Read our free research report to see why you should think twice about including VRSN in your portfolio.

Hexcel (HXL)

Trailing 12-Month GAAP Operating Margin: 6.3%

Founded shortly after World War II by a group of engineers from UC Berkley, Hexcel (NYSE: HXL) manufactures lightweight composite materials primarily for the aerospace and defense sectors.

Why Do We Steer Clear of HXL?

1. Annual revenue growth of 1.2% over the last five years was below our standards for the industrials sector
2. Flat earnings per share over the last two years lagged its peers
3. Low returns on capital reflect management’s struggle to allocate funds effectively

Hexcel is trading at $71.73 per share, or 32.3x forward P/E. To fully understand why you should be careful with HXL, check out our full research report (it’s free for active Edge members).

Landstar (LSTR)

Trailing 12-Month GAAP Operating Margin: 3.8%

Covering billions of miles throughout North America, Landstar (NASDAQ: LSTR) is a transportation company specializing in freight and last-mile delivery services.

Why Are We Out on LSTR?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 8.9% annually over the last two years
2. Performance over the past five years shows its incremental sales were less profitable as its earnings per share were flat
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

At $124.88 per share, Landstar trades at 23.9x forward P/E. Dive into our free research report to see why there are better opportunities than LSTR.

Stocks We Like More

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 9 Market-Beating Stocks. 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).

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