Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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 balances growth and profitability and two that may struggle to keep up.
Two Stocks to Sell:
Apogee (APOG)
Trailing 12-Month GAAP Operating Margin: 8.1%
Involved in the design of the Apple Store on Fifth Avenue in New York City, Apogee (NASDAQ:APOG) sells architectural products and services such as high-performance glass for commercial buildings.
Why Do We Avoid APOG?
- Sales stagnated over the last two years and signal the need for new growth strategies
- Earnings per share have contracted by 17.8% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
- Eroding returns on capital suggest its historical profit centers are aging
Apogee’s stock price of $37.73 implies a valuation ratio of 12.4x forward P/E. If you’re considering APOG for your portfolio, see our FREE research report to learn more.
Kennametal (KMT)
Trailing 12-Month GAAP Operating Margin: 20.1%
Involved in manufacturing hard tips of anti-tank projectiles in World War II, Kennametal (NYSE:KMT) is a provider of industrial materials and tools for various sectors.
Why Are We Cautious About KMT?
- 5.1% annual revenue growth over the last five years was slower than its industrials peers
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- 7.6 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 $29.85 per share, Kennametal trades at 6.2x forward P/E. Dive into our free research report to see why there are better opportunities than KMT.
One Stock to Watch:
MediaAlpha (MAX)
Trailing 12-Month GAAP Operating Margin: 6.9%
Powering nearly 10 million consumer referrals each month in the insurance marketplace, MediaAlpha (NYSE:MAX) operates a technology platform that connects insurance carriers with high-intent consumers shopping for property, casualty, health, and life insurance products.
Why Are We Fans of MAX?
- Market share has increased this cycle as its 57% annual revenue growth over the last two years was exceptional
- Adjusted operating margin expanded by 3.5 percentage points over the last five years as it scaled and became more efficient
- Earnings per share grew by 171% annually over the last two years, massively outpacing its peers
MediaAlpha is trading at $10.81 per share, or 8.5x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.