Even if a company is profitable, it doesn’t always mean it’s a great investment. Some struggle to maintain growth, face looming threats, or fail to reinvest wisely, limiting their future potential.
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 struggle to keep up.
Two Stocks to Sell:
Genuine Parts (GPC)
Trailing 12-Month GAAP Operating Margin: 4.9%
Largely targeting the professional customer, Genuine Parts (NYSE: GPC) sells auto and industrial parts such as batteries, belts, bearings, and machine fluids.
Why Are We Cautious About GPC?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 4% over the last three years was below our standards for the consumer retail sector
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Free cash flow margin shrank by 3.3 percentage points over the last year, suggesting the company is consuming more capital to stay competitive
At $129.17 per share, Genuine Parts trades at 15.8x forward P/E. Read our free research report to see why you should think twice about including GPC in your portfolio.
PENN Entertainment (PENN)
Trailing 12-Month GAAP Operating Margin: 3.3%
Established in 1982, PENN Entertainment (NASDAQ: PENN) is a diversified American operator of casinos, sports betting, and entertainment venues.
Why Do We Steer Clear of PENN?
- 11.9% annual revenue growth over the last five years was slower than its consumer discretionary peers
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
- 6× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
PENN Entertainment is trading at $14.19 per share, or 14.3x forward P/E. If you’re considering PENN for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
RBC Bearings (RBC)
Trailing 12-Month GAAP Operating Margin: 22.4%
With a Guinness World Record for engineering the largest spherical plain bearing, RBC Bearings (NYSE: RBC) is a manufacturer of bearings and related components for the aerospace & defense, industrial, and transportation industries.
Why Should You Buy RBC?
- Annual revenue growth of 21% over the last five years was superb and indicates its market share increased during this cycle
- Earnings growth has trumped its peers over the last five years as its EPS has compounded at 19.7% annually
- Strong free cash flow margin of 15.6% enables it to reinvest or return capital consistently
RBC Bearings’s stock price of $446.74 implies a valuation ratio of 35.2x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
Stocks We Like Even More
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.
Don’t wait for the next volatility shock. Check out our Top 5 Strong Momentum Stocks for this week. 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 Tecnoglass (+1,754% 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.
