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 is one profitable company that generates reliable profits without sacrificing growth and two best left off your watchlist.
Two Stocks to Sell:
BlackLine (BL)
Trailing 12-Month GAAP Operating Margin: 3.6%
Born from the vision to eliminate tedious manual spreadsheet work for accountants, BlackLine (NASDAQ: BL) provides cloud-based software that automates and streamlines financial close, intercompany accounting, and invoice-to-cash processes for accounting departments.
Why Does BL Give Us Pause?
- Average billings growth of 7.2% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
- Struggled to drive increased usage of its software, demonstrated by its subpar 103% net revenue retention rate
- Operating margin failed to increase over the last year, indicating the company couldn’t optimize its expenses
At $55.50 per share, BlackLine trades at 4.9x forward price-to-sales. Check out our free in-depth research report to learn more about why BL doesn’t pass our bar.
La-Z-Boy (LZB)
Trailing 12-Month GAAP Operating Margin: 5.8%
The prized possession of every mancave, La-Z-Boy (NYSE: LZB) is a furniture company specializing in recliners, sofas, and seats.
Why Are We Out on LZB?
- Sales trends were unexciting over the last five years as its 5.8% annual growth was below the typical consumer discretionary company
- Forecasted free cash flow margin suggests the company will fail to improve its cash conversion over the next year
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
La-Z-Boy’s stock price of $39.95 implies a valuation ratio of 14.1x forward P/E. Read our free research report to see why you should think twice about including LZB in your portfolio.
One Stock to Watch:
Parker-Hannifin (PH)
Trailing 12-Month GAAP Operating Margin: 20.7%
Founded in 1917, Parker Hannifin (NYSE: PH) is a manufacturer of motion and control systems for a wide variety of mobile, industrial and aerospace markets.
Why Is PH on Our Radar?
- Excellent operating margin of 18.2% highlights the efficiency of its business model, and it turbocharged its profits by achieving some fixed cost leverage
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its growing cash flow gives it even more resources to deploy
Parker-Hannifin is trading at $869.18 per share, or 27.9x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
Stocks We Like Even More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged 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-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
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