Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.
Profits are valuable, but they’re not everything. At StockStory, we help you identify the companies that have real staying power. Keeping that in mind, here is one profitable company that balances growth and profitability and two that may face some trouble.
Two Stocks to Sell:
Starbucks (SBUX)
Trailing 12-Month GAAP Operating Margin: 7.8%
Started by three friends in Seattle’s historic Pike Place Market, Starbucks (NASDAQ:SBUX) is a globally-renowned coffeehouse chain that offers a wide selection of high-quality coffee, beverages, and food items.
Why Are We Cautious About SBUX?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its menu offerings and dining experience
- Projected sales decline of 1.9% for the next 12 months points to a tough demand environment ahead
- Efficiency has decreased over the last year as its operating margin fell by 3 percentage points
Starbucks’s stock price of $97.26 implies a valuation ratio of 33x forward P/E. If you’re considering SBUX for your portfolio, see our FREE research report to learn more.
Hyatt Hotels (H)
Trailing 12-Month GAAP Operating Margin: 6%
Founded in 1957, Hyatt Hotels (NYSE:H) is a global hospitality company with a portfolio of 20 premier brands and over 950 properties across 65 countries.
Why Should You Sell H?
- Sales trends were unexciting over the last two years as its 3.3% annual growth was below the typical consumer discretionary company
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Hyatt Hotels is trading at $169.59 per share, or 44x forward P/E. Dive into our free research report to see why there are better opportunities than H.
One Stock to Watch:
Cardinal Health (CAH)
Trailing 12-Month GAAP Operating Margin: 1%
Operating as a critical link in the healthcare supply chain since 1979, Cardinal Health (NYSE:CAH) distributes pharmaceuticals and manufactures medical products for hospitals, pharmacies, and healthcare providers across the global healthcare supply chain.
Why Are We Positive on CAH?
- Massive revenue base of $254.2 billion in a highly regulated sector makes the company difficult to replace, giving it meaningful negotiating power
- Share buybacks catapulted its annual earnings per share growth to 14.6%, which outperformed its revenue gains over the last five years
At $254.10 per share, Cardinal Health trades at 20.2x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
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-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.