Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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 is one profitable company that leverages its financial strength to beat the competition and two best left off your watchlist.
Two Stocks to Sell:
Carter's (CRI)
Trailing 12-Month GAAP Operating Margin: 8%
Rumored to sell more than 10 products for every child born in the United States, Carter's (NYSE:CRI) is an American designer and marketer of children's apparel.
Why Is CRI Risky?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and in-store experience
- Demand will likely be weak over the next 12 months as Wall Street expects flat revenue
- Diminishing returns on capital suggest its earlier profit pools are drying up
Carter's is trading at $30.52 per share, or 8.6x forward P/E. To fully understand why you should be careful with CRI, check out our full research report (it’s free).
TopBuild (BLD)
Trailing 12-Month GAAP Operating Margin: 16.1%
Established in 2015 following a spinoff from Masco Corporation, TopBuild (NYSE:BLD) is a distributor and installer of insulation and other building products.
Why Are We Cautious About BLD?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Estimated sales decline of 2.6% for the next 12 months implies a challenging demand environment
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 7.7% annually
At $320.93 per share, TopBuild trades at 15.6x forward P/E. Check out our free in-depth research report to learn more about why BLD doesn’t pass our bar.
One Stock to Buy:
Chipotle (CMG)
Trailing 12-Month GAAP Operating Margin: 17%
Born from a desire to offer quick meals with fresh, flavorful ingredients, Chipotle (NYSE:CMG) is a fast-food chain known for its healthy, Mexican-inspired cuisine and customizable dishes.
Why Are We Bullish on CMG?
- Offensive push to build new restaurants and attack its untapped market opportunities is backed by its same-store sales growth
- Average same-store sales growth of 6.2% over the past two years indicates its restaurants are resonating with diners
- Unparalleled revenue scale of $11.49 billion gives it advantageous pricing and terms with suppliers
Chipotle’s stock price of $54.28 implies a valuation ratio of 41.4x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% 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