Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.
Not all profitable companies are created equal, and that’s why we built StockStory - to help you find the ones that truly shine bright. Keeping that in mind, here is one profitable company that generates reliable profits without sacrificing growth and two best left off your watchlist.
Two Stocks to Sell:
Designer Brands (DBI)
Trailing 12-Month GAAP Operating Margin: 1.2%
Founded in 1969 as a shoe importer and distributor, Designer Brands (NYSE:DBI) is an American discount retailer focused on footwear and accessories.
Why Is DBI Risky?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
- Falling earnings per share over the last three years has some investors worried as stock prices ultimately follow EPS over the long term
- High net-debt-to-EBITDA ratio of 11× could force the company to raise capital at unfavorable terms if market conditions deteriorate
Designer Brands is trading at $7.25 per share, or 24.2x forward P/E. Dive into our free research report to see why there are better opportunities than DBI.
Shoals (SHLS)
Trailing 12-Month GAAP Operating Margin: 12.8%
Started in Huntsville, Alabama, Shoals (NASDAQ:SHLS) designs and manufactures products that make solar energy systems work more efficiently.
Why Are We Cautious About SHLS?
- Sales tumbled by 2.1% annually over the last two years, showing market trends are working against its favor during this cycle
- Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
Shoals’s stock price of $9.08 implies a valuation ratio of 19.3x forward P/E. If you’re considering SHLS for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
Cal-Maine (CALM)
Trailing 12-Month GAAP Operating Margin: 34.3%
Known for brands such as Egg-Land’s Best and Land O’ Lakes, Cal-Maine (NASDAQ:CALM) produces, packages, and distributes eggs.
Why Are We Positive On CALM?
- Impressive 18.5% annual revenue growth over the last three years indicates it’s winning market share
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 34.7% exceeded its revenue gains over the last three years
- Robust free cash flow margin of 22.5% gives it many options for capital deployment, and its rising cash conversion increases its margin of safety
At $72.85 per share, Cal-Maine trades at 23.1x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
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.