While profitability is essential, it doesn’t guarantee long-term success. Some companies that rest on their margins will lose ground as competition intensifies — as Jeff Bezos said, “Your margin is my opportunity”.
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 leverages its financial strength to beat the competition and two that may struggle to keep up.
Two Stocks to Sell:
Macy's (M)
Trailing 12-Month GAAP Operating Margin: 4.6%
With a storied history that began with its 1858 founding, Macy’s (NYSE: M) is a department store chain that sells clothing, cosmetics, accessories, and home goods.
Why Should You Sell M?
- Ongoing store closures and lackluster same-store sales indicate sluggish demand and a focus on consolidation
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Earnings per share have dipped by 17.8% annually over the past three years, which is concerning because stock prices follow EPS over the long term
Macy's is trading at $24.20 per share, or 10.6x forward P/E. To fully understand why you should be careful with M, check out our full research report (it’s free).
Gates Industrial Corporation (GTES)
Trailing 12-Month GAAP Operating Margin: 13%
Helping create one of the most memorable moments for the iconic “Jurassic Park” film, Gates (NYSE: GTES) offers power transmission and fluid transfer equipment for various industries.
Why Is GTES Not Exciting?
- 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
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 3.5% annually
- ROIC of 7% reflects management’s challenges in identifying attractive investment opportunities
At $27.41 per share, Gates Industrial Corporation trades at 15.8x forward P/E. Check out our free in-depth research report to learn more about why GTES doesn’t pass our bar.
One Stock to Buy:
Curtiss-Wright (CW)
Trailing 12-Month GAAP Operating Margin: 18.4%
Formed from a merger of 12 companies, Curtiss-Wright (NYSE: CW) provides a range of products and services to the aerospace, industrial, electronic, and maritime industries.
Why Should You Buy CW?
- Annual revenue growth of 11% over the last two years was superb and indicates its market share increased during this cycle
- Share repurchases over the last two years enabled its annual earnings per share growth of 18.9% to outpace its revenue gains
- Free cash flow margin expanded by 6.3 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
Curtiss-Wright’s stock price of $746.36 implies a valuation ratio of 46.2x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating 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-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
