Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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 is one profitable company that generates reliable profits without sacrificing growth and two best left off your watchlist.

Two Stocks to Sell:

Pilgrim's Pride (PPC)

Trailing 12-Month GAAP Operating Margin: 9.4%

Offering everything from pre-marinated to frozen chicken, Pilgrim’s Pride (NASDAQ: PPC) produces, processes, and distributes chicken products to retailers and food service customers.

Why Are We Out on PPC?

1. Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 1.8% over the last three years was below our standards for the consumer staples sector
2. Estimated sales decline of 1.3% for the next 12 months implies a challenging demand environment
3. Gross margin of 12.5% is an output of its commoditized products

At $37.25 per share, Pilgrim's Pride trades at 9x forward P/E. Read our free research report to see why you should think twice about including PPC in your portfolio.

Boyd Gaming (BYD)

Trailing 12-Month GAAP Operating Margin: 20.7%

Run by the Boyd family, Boyd Gaming (NYSE: BYD) is a diversified operator of gaming entertainment properties across the United States, offering casino games, hotel accommodations, and dining.

Why Do We Think BYD Will Underperform?

1. 11.4% annual revenue growth over the last five years was slower than its consumer discretionary peers
2. Low free cash flow margin of 11.9% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
3. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value

Boyd Gaming is trading at $82.79 per share, or 10.8x forward P/E. If you’re considering BYD for your portfolio, see our FREE research report to learn more.

One Stock to Watch:

Shake Shack (SHAK)

Trailing 12-Month GAAP Operating Margin: 3.9%

Started as a hot dog cart in New York City's Madison Square Park, Shake Shack (NYSE: SHAK) is a fast-food restaurant known for its burgers and milkshakes.

Why Is SHAK on Our Radar?

1. Offensive push to build new restaurants and attack its untapped market opportunities is backed by its same-store sales growth
2. Average same-store sales growth of 3% over the past two years indicates its restaurants are resonating with diners
3. Operating profits and efficiency rose over the last year as it benefited from some fixed cost leverage

Shake Shack’s stock price of $86.62 implies a valuation ratio of 56.9x 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

If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.

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