3 Profitable Stocks We Find Risky

September 29, 2025 at 00:33 AM EDT

PAYC Cover Image

Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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 are three profitable companies that don’t make the cut and some better opportunities instead.

Paycom (PAYC)

Trailing 12-Month GAAP Operating Margin: 28.1%

Pioneering the concept of employees doing their own payroll with its "Beti" technology, Paycom (NYSE: PAYC) provides cloud-based human capital management software that helps businesses manage the entire employment lifecycle from recruitment to retirement.

Why Is PAYC Not Exciting?

Offerings struggled to generate meaningful interest as its average billings growth of 9.7% over the last year did not impress
Estimated sales growth of 9.4% for the next 12 months implies demand will slow from its two-year trend
Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 4.8 percentage points

Paycom’s stock price of $217 implies a valuation ratio of 5.7x forward price-to-sales. Check out our free in-depth research report to learn more about why PAYC doesn’t pass our bar.

Donaldson (DCI)

Trailing 12-Month GAAP Operating Margin: 13.4%

Playing a vital role in the historic Apollo 11 mission, Donaldson (NYSE: DCI) manufacturers and sells filtration equipment for various industries.

Why Does DCI Give Us Pause?

Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 3.2%
Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 2.8 percentage points

Donaldson is trading at $81.02 per share, or 20.5x forward P/E. Dive into our free research report to see why there are better opportunities than DCI.

GATX (GATX)

Trailing 12-Month GAAP Operating Margin: 31.4%

Originally founded to ship beer, GATX (NYSE: GATX) provides leasing and management services for railcars and other transportation assets globally.

Why Do We Think Twice About GATX?

Number of active railcars has disappointed over the past two years, indicating weak demand for its offerings
Negative free cash flow raises questions about the return timeline for its investments
Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders

At $176.97 per share, GATX trades at 19.2x forward P/E. To fully understand why you should be careful with GATX, check out our full research report (it’s free).

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3 Profitable Stocks We Find Risky

Paycom (PAYC)

Donaldson (DCI)

GATX (GATX)

Stocks We Like More

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