While profitability is essential, it doesn’t guarantee long-term success. Some companies that rest on their margins will lose ground as competition intensifies - as Jeff Bezos said, "Your margin is my opportunity".
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 generates reliable profits without sacrificing growth and two that may face some trouble.
Two Stocks to Sell:
Luxfer (LXFR)
Trailing 12-Month GAAP Operating Margin: 9.7%
With its magnesium alloys used in the construction of the famous Spirit of St. Louis aircraft, Luxfer (NYSE: LXFR) offers specialized materials, components, and gas containment devices to various industries.
Why Do We Think LXFR Will Underperform?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 2.5% annually over the last two years
- Sales are projected to tank by 4.2% over the next 12 months as its demand continues evaporating
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Luxfer’s stock price of $14.01 implies a valuation ratio of 12.4x forward P/E. To fully understand why you should be careful with LXFR, check out our full research report (it’s free for active Edge members).
CNO Financial Group (CNO)
Trailing 12-Month GAAP Operating Margin: 14.3%
Rebranded from Conseco in 2010 to signal a fresh start after navigating financial challenges, CNO Financial Group (NYSE: CNO) develops and markets health insurance, annuities, and life insurance products primarily targeting middle-income pre-retirees and retirees.
Why Are We Cautious About CNO?
- Net premiums earned remained stagnant over the last five years, indicating expansion challenges this cycle
- Anticipated sales growth of 3.8% for the next year implies demand will be shaky
- Book value per share tumbled by 5.7% annually over the last five years, showing insurance sector trends are working against its favor during this cycle
At $43.56 per share, CNO Financial Group trades at 1.6x forward P/B. Dive into our free research report to see why there are better opportunities than CNO.
One Stock to Buy:
W. R. Berkley (WRB)
Trailing 12-Month GAAP Operating Margin: 16.6%
Founded in 1967 and operating through more than 50 specialized insurance units across the globe, W. R. Berkley (NYSE: WRB) underwrites commercial insurance and reinsurance through specialized subsidiaries serving industries from healthcare to construction to transportation.
Why Is WRB a Top Pick?
- Net premiums earned surged by 12.4% annually over the past five years, reflecting strong market share gains this cycle
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 35.5% exceeded its revenue gains over the last five years
- Book value per share outlook for the upcoming 12 months is outstanding and shows it’s on track to build significant equity value
W. R. Berkley is trading at $70.58 per share, or 2.7x forward P/B. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 5 Growth Stocks for this month. 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-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.
