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 best left off your watchlist.

Two Stocks to Sell:

Genesco (GCO)

Trailing 12-Month GAAP Operating Margin: 1.2%

Spanning a broad range of styles, brands, and prices, Genesco (NYSE: GCO) sells footwear, apparel, and accessories through multiple brands and banners.

Why Should You Dump GCO?

1. Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
2. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
3. 8× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings

Genesco’s stock price of $39.02 implies a valuation ratio of 0.2x forward price-to-sales. To fully understand why you should be careful with GCO, check out our full research report (it’s free).

Papa John's (PZZA)

Trailing 12-Month GAAP Operating Margin: 4.3%

Founded by the eclectic John “Papa John” Schnatter, Papa John’s (NASDAQ: PZZA) is a globally recognized pizza delivery and carryout chain known for “better ingredients” and “better pizza”.

Why Do We Think PZZA Will Underperform?

1. Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new restaurants
2. Forecasted revenue decline of 5.5% for the upcoming 12 months implies demand will fall off a cliff
3. Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 2.9 percentage points

At $31.87 per share, Papa John's trades at 19.8x forward P/E. Read our free research report to see why you should think twice about including PZZA in your portfolio.

One Stock to Buy:

RBC Bearings (RBC)

Trailing 12-Month GAAP Operating Margin: 22.5%

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 Are We Backing RBC?

1. Impressive 25.2% annual revenue growth over the last five years indicates it’s winning market share this cycle
2. Incremental sales over the last two years have been highly profitable as its earnings per share increased by 19.8% annually, topping its revenue gains
3. Strong free cash flow margin of 15.5% enables it to reinvest or return capital consistently, and its recently improved profitability means it has even more resources to invest or distribute

RBC Bearings is trading at $595.97 per share, or 40.3x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.

Stocks We Like Even More

WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.

But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.

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 Kadant (+351% five-year return). Find your next big winner with StockStory today.