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".
A business making money today isn’t necessarily a winner, which is why we analyze companies across multiple dimensions at StockStory. 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:
Texas Instruments (TXN)
Trailing 12-Month GAAP Operating Margin: 34.3%
Headquartered in Dallas, Texas since the 1950s, Texas Instruments (NASDAQ:TXN) is the world’s largest producer of analog semiconductors.
Why Does TXN Give Us Pause?
- Sales tumbled by 2.4% annually over the last two years, showing market trends are working against its favor during this cycle
- Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 13.5 percentage points
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 28.5 percentage points
Texas Instruments is trading at $162.23 per share, or 27.3x forward P/E. Check out our free in-depth research report to learn more about why TXN doesn’t pass our bar.
Werner (WERN)
Trailing 12-Month GAAP Operating Margin: 2%
Conducting business in over a 100 countries, Werner (NASDAQ:WERN) offers full-truckload, less-than-truckload, and intermodal delivery services.
Why Do We Think WERN Will Underperform?
- Annual sales declines of 5.1% for the past two years show its products and services struggled to connect with the market during this cycle
- Earnings per share fell by 55.8% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
Werner’s stock price of $25.16 implies a valuation ratio of 40.3x forward P/E. To fully understand why you should be careful with WERN, check out our full research report (it’s free for active Edge members).
One Stock to Buy:
ADP (ADP)
Trailing 12-Month GAAP Operating Margin: 26.2%
Processing one out of every six paychecks in the United States, ADP (NASDAQ:ADP) provides cloud-based human capital management solutions that help businesses manage payroll, benefits, talent acquisition, and HR administration.
Why Is ADP a Top Pick?
- Offerings and unique value proposition resonate with customers, as seen in its above-market 7.5% annual sales growth over the last five years
- Strong free cash flow margin of 20.5% enables it to reinvest or return capital consistently, and its rising cash conversion increases its margin of safety
- Returns on capital are climbing as management makes more lucrative bets
At $254.12 per share, ADP trades at 22.8x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
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 5 Strong Momentum 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 (+1,545% 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
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