Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.
A business making money today isn’t necessarily a winner, which is why we analyze companies across multiple dimensions at StockStory. That said, here is one profitable company that generates reliable profits without sacrificing growth and two that may struggle to keep up.
Two Stocks to Sell:
Regal Rexnord (RRX)
Trailing 12-Month GAAP Operating Margin: 11.1%
Headquartered in Milwaukee, Regal Rexnord (NYSE:RRX) provides power transmission and industrial automation products.
Why Are We Wary of RRX?
- 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
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 5% annually
- Below-average returns on capital indicate management struggled to find compelling investment opportunities, and its falling returns suggest its earlier profit pools are drying up
Regal Rexnord’s stock price of $136.03 implies a valuation ratio of 13.4x forward P/E. To fully understand why you should be careful with RRX, check out our full research report (it’s free).
ASGN (ASGN)
Trailing 12-Month GAAP Operating Margin: 7%
Evolving from its roots in IT staffing to become a high-end technology consulting powerhouse, ASGN (NYSE:ASGN) provides specialized IT consulting services and staffing solutions to Fortune 1000 companies and U.S. federal government agencies.
Why Is ASGN Risky?
- Sales tumbled by 6.7% annually over the last two years, showing market trends are working against its favor during this cycle
- Sales were less profitable over the last two years as its earnings per share fell by 11.6% annually, worse than its revenue declines
- 5.1 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 $52.78 per share, ASGN trades at 10.4x forward P/E. Read our free research report to see why you should think twice about including ASGN in your portfolio.
One Stock to Watch:
Deckers (DECK)
Trailing 12-Month GAAP Operating Margin: 23.7%
Established in 1973, Deckers (NYSE:DECK) is a footwear and apparel conglomerate with a portfolio of lifestyle and performance brands.
Why Are We Fans of DECK?
- Strong consumer demand for its brand drove 18.5% annual revenue growth over the last five years, outperforming sector peers
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Returns on capital are climbing as management makes more lucrative bets
Deckers is trading at $105.80 per share, or 16.9x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 6 Stocks for this week. 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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.