Even if a company is profitable, it doesn’t always mean it’s a great investment. Some struggle to maintain growth, face looming threats, or fail to reinvest wisely, limiting their future potential.
Profits are valuable, but they’re not everything. At StockStory, we help you identify the companies that have real staying power. That said, here are three profitable companies that don’t make the cut and some better opportunities instead.
Papa John's (PZZA)
Trailing 12-Month GAAP Operating Margin: 7.1%
Founded by the eclectic John “Papa John” Schnatter, Papa John’s (NASDAQ:PZZA) is a globally recognized pizza delivery and carryout chain known for “better ingredients” and “better pizza”.
Why Should You Sell PZZA?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Estimated sales growth of 2.9% for the next 12 months implies demand will slow from its six-year trend
- Challenging supply chain dynamics and bad unit economics are reflected in its low gross margin of 17.3%
At $48.25 per share, Papa John's trades at 24.1x forward P/E. Read our free research report to see why you should think twice about including PZZA in your portfolio.
Post (POST)
Trailing 12-Month GAAP Operating Margin: 10%
Founded in 1895, Post (NYSE:POST) is a packaged food company known for its namesake breakfast cereal and healthier-for-you snacks.
Why Is POST Not Exciting?
- Falling unit sales over the past two years indicate demand is soft and that the company may need to revise its product strategy
- Capital intensity has ramped up over the last year as its free cash flow margin decreased by 1.7 percentage points
- ROIC of 5.9% reflects management’s challenges in identifying attractive investment opportunities
Post is trading at $109.03 per share, or 15.4x forward P/E. If you’re considering POST for your portfolio, see our FREE research report to learn more.
CSX (CSX)
Trailing 12-Month GAAP Operating Margin: 34.7%
Established as part of the Chessie System and Seaboard Coast Line Industries merger, CSX (NASDAQ:CSX) is a transportation company specializing in freight rail services.
Why Do We Avoid CSX?
- Flat unit sales over the past two years suggest it might have to lower prices to accelerate growth
- Performance over the past two years shows each sale was less profitable as its earnings per share dropped by 7.4% annually, worse than its revenue
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 15.6 percentage points
CSX’s stock price of $32.87 implies a valuation ratio of 17.8x forward P/E. To fully understand why you should be careful with CSX, check out our full research report (it’s free).
Stocks We Like More
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 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 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