Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.
A business making money today isn’t necessarily a winner, which is why we analyze companies across multiple dimensions at StockStory. That said, here is one profitable company that balances growth and profitability and two best left off your watchlist.
Two Stocks to Sell:
LSI (LYTS)
Trailing 12-Month GAAP Operating Margin: 6.3%
Enhancing commercial environments, LSI (NASDAQ: LYTS) provides lighting and display solutions for businesses and retailers.
Why Does LYTS Fall Short?
- Sales trends were unexciting over the last two years as its 4.5% annual growth was below the typical industrials company
- Issuance of new shares over the last two years caused its earnings per share growth of 2.7% to lag its revenue gains
- 5.9 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
At $16.92 per share, LSI trades at 13.7x forward P/E. Read our free research report to see why you should think twice about including LYTS in your portfolio.
Ball (BALL)
Trailing 12-Month GAAP Operating Margin: 7.4%
Started with a $200 loan in 1880, Ball (NYSE: BLL) manufactures aluminum packaging for beverages, personal care, and household products as well as aerospace systems and other technologies.
Why Should You Dump BALL?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of -0.6% for the last five years
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Ball’s stock price of $54.33 implies a valuation ratio of 15x forward P/E. To fully understand why you should be careful with BALL, check out our full research report (it’s free).
One Stock to Watch:
The Ensign Group (ENSG)
Trailing 12-Month GAAP Operating Margin: 8.5%
Founded in 1999 and named after a naval term for a flag-bearing ship, The Ensign Group (NASDAQ: ENSG) operates skilled nursing facilities, senior living communities, and rehabilitation services across 15 states, primarily serving high-acuity patients recovering from various medical conditions.
Why Are We Fans of ENSG?
- Products are reaching more customers as its unit sales averaged 13.2% growth over the past two years
- Forecasted revenue growth of 14.3% for the next 12 months indicates its momentum over the last two years is sustainable
- Earnings per share grew by 18.4% annually over the last five years, massively outpacing its peers
The Ensign Group is trading at $147.70 per share, or 22.9x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking 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 176% over the last five years.
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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.
