A company with profits isn’t always a great investment. Some struggle to maintain growth, face looming threats, or fail to reinvest wisely, limiting their future potential.
A business making money today isn’t necessarily a winner, which is why we analyze companies across multiple dimensions at StockStory. Keeping that in mind, here are three profitable companies that don’t make the cut and some better opportunities instead.
GameStop (GME)
Trailing 12-Month GAAP Operating Margin: 1.3%
Drawing gaming fans with demo units set up with the latest releases, GameStop (NYSE: GME) sells new and used video games, consoles, and accessories, as well as pop culture merchandise.
Why Should You Dump GME?
- Products have few die-hard fans as sales have declined by 12.3% annually over the last six years
- Sales are projected to tank by 6% over the next 12 months as its demand continues evaporating
- Negative returns on capital show that some of its growth strategies have backfired
GameStop’s stock price of $23.44 implies a valuation ratio of 47.1x forward P/E. Read our free research report to see why you should think twice about including GME in your portfolio.
Vestis (VSTS)
Trailing 12-Month GAAP Operating Margin: 3.3%
Operating a network of more than 350 facilities with 3,300 delivery routes serving customers weekly, Vestis (NYSE: VSTS) provides uniform rentals, workplace supplies, and facility services to over 300,000 business locations across the United States and Canada.
Why Do We Think VSTS Will Underperform?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last two years
- Earnings per share have dipped by 33% annually over the past three years, which is concerning because stock prices follow EPS over the long term
- Free cash flow margin dropped by 6 percentage points over the last four years, implying the company became more capital intensive as competition picked up
Vestis is trading at $6.10 per share, or 7.7x forward P/E. If you’re considering VSTS for your portfolio, see our FREE research report to learn more.
Graphic Packaging Holding (GPK)
Trailing 12-Month GAAP Operating Margin: 12.3%
Founded in 1991, Graphic Packaging (NYSE: GPK) is a provider of paper-based packaging solutions for a wide range of products.
Why Should You Sell GPK?
- Declining unit sales over the past two years indicate demand is soft and that the company may need to revise its strategy
- Earnings per share have contracted by 5.7% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 10.8 percentage points
At $21.20 per share, Graphic Packaging Holding trades at 8.6x forward P/E. Dive into our free research report to see why there are better opportunities than GPK.
High-Quality Stocks for All Market Conditions
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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 183% over the last five years (as of March 31st 2025).
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. Find your next big winner with StockStory today. Find your next big winner with StockStory today
