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 balances growth and profitability and two best left off your watchlist.
Two Stocks to Sell:
Brown-Forman (BF.B)
Trailing 12-Month GAAP Operating Margin: 27.8%
Best known for its Jack Daniel’s whiskey, Brown-Forman (NYSE: BF.B) is an alcoholic beverage company with a broad portfolio of brands in wines and spirits.
Why Does BF.B Fall Short?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Estimated sales decline of 3% for the next 12 months implies an even more challenging demand environment
- Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 6 percentage points
Brown-Forman is trading at $28.11 per share, or 14.5x forward P/E. Read our free research report to see why you should think twice about including BF.B in your portfolio.
Sealed Air (SEE)
Trailing 12-Month GAAP Operating Margin: 13.8%
Founded in 1960, Sealed Air Corporation (NYSE: SEE) specializes in the development and production of protective and food packaging solutions, serving a variety of industries.
Why Do We Avoid SEE?
- Declining unit sales over the past two years imply it may need to invest in improvements to get back on track
- Sales were less profitable over the last two years as its earnings per share fell by 7.5% annually, worse than its revenue declines
- Waning returns on capital imply its previous profit engines are losing steam
Sealed Air’s stock price of $32.28 implies a valuation ratio of 10.6x forward P/E. Dive into our free research report to see why there are better opportunities than SEE.
One Stock to Watch:
AZZ (AZZ)
Trailing 12-Month GAAP Operating Margin: 15.4%
Responsible for projects like nuclear facilities, AZZ (NYSE: AZZ) is a provider of metal coating and power infrastructure solutions.
Why Are We Positive On AZZ?
- 9.2% annual revenue growth over the last two years surpassed the sector average as its offerings resonated with customers
- Operating margin expanded by 5.7 percentage points over the last five years as it scaled and became more efficient
- Additional sales over the last two years increased its profitability as the 24% annual growth in its earnings per share outpaced its revenue
At $94.44 per share, AZZ trades at 16.2x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out 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 Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.
