Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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 are three profitable companies that don’t make the cut and some better opportunities instead.
Hormel Foods (HRL)
Trailing 12-Month GAAP Operating Margin: 5.9%
Best known for its SPAM brand, Hormel (NYSE: HRL) is a packaged foods company with products that span meat, poultry, shelf-stable foods, and spreads.
Why Do We Steer Clear of HRL?
- Shrinking unit sales over the past two years show it’s struggled to move its products and had to rely on price increases
- Commoditized products, bad unit economics, and high competition are reflected in its low gross margin of 16.4%
- Sales over the last three years were less profitable as its earnings per share fell by 9.2% annually while its revenue was flat
At $24.12 per share, Hormel Foods trades at 16.6x forward P/E. Dive into our free research report to see why there are better opportunities than HRL.
LeMaitre (LMAT)
Trailing 12-Month GAAP Operating Margin: 25.7%
Founded in 1983 and named after a pioneering vascular surgeon, LeMaitre Vascular (NASDAQGM:LMAT) develops and manufactures specialized medical devices used by vascular surgeons to treat peripheral vascular disease and other circulatory conditions.
Why Is LMAT Not Exciting?
- Revenue base of $240.9 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
LeMaitre is trading at $83.79 per share, or 32.7x forward P/E. Read our free research report to see why you should think twice about including LMAT in your portfolio.
DaVita (DVA)
Trailing 12-Month GAAP Operating Margin: 15.4%
With over 2,600 dialysis centers across the United States and a presence in 13 countries, DaVita (NYSE: DVA) operates a network of dialysis centers providing treatment and care for patients with chronic kidney disease and end-stage kidney disease.
Why Are We Wary of DVA?
- Annual sales growth of 2.9% over the last five years lagged behind its healthcare peers as its large revenue base made it difficult to generate incremental demand
- Flat treatments over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
- Estimated sales growth of 3.7% for the next 12 months implies demand will slow from its two-year trend
DaVita’s stock price of $113.96 implies a valuation ratio of 9.3x forward P/E. Check out our free in-depth research report to learn more about why DVA doesn’t pass our bar.
Stocks We Like 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 6 Stocks for this week. 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-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.
