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. That said, here is one profitable company that generates reliable profits without sacrificing growth and two that may face some trouble.
Two Stocks to Sell:
Columbia Sportswear (COLM)
Trailing 12-Month GAAP Operating Margin: 8.1%
Originally founded as a hat store in 1938, Columbia Sportswear (NASDAQ: COLM) is a manufacturer of outerwear, sportswear, and footwear designed for outdoor enthusiasts.
Why Are We Out on COLM?
- Underwhelming constant currency revenue performance over the past two years suggests its product offering at current prices doesn’t resonate with customers
- Projected sales for the next 12 months are flat and suggest demand will be subdued
- Eroding returns on capital suggest its historical profit centers are aging
At $66 per share, Columbia Sportswear trades at 18.3x forward P/E. If you’re considering COLM for your portfolio, see our FREE research report to learn more.
Harley-Davidson (HOG)
Trailing 12-Month GAAP Operating Margin: 6.6%
Founded in 1903, Harley-Davidson (NYSE: HOG) is an American motorcycle manufacturer known for its heavyweight motorcycles designed for cruising on highways.
Why Do We Avoid HOG?
- Number of motorcycles sold has disappointed over the past two years, indicating weak demand for its offerings
- Diminishing returns on capital suggest its earlier profit pools are drying up
- 13× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Harley-Davidson’s stock price of $24.99 implies a valuation ratio of 7.4x forward P/E. Read our free research report to see why you should think twice about including HOG in your portfolio.
One Stock to Watch:
United Rentals (URI)
Trailing 12-Month GAAP Operating Margin: 25.8%
Owning the largest rental fleet in the world, United Rentals (NYSE: URI) provides equipment rental and related services to construction, industrial, and infrastructure industries.
Why Are We Fans of URI?
- Impressive 12.1% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Healthy operating margin of 25.6% shows it’s a well-run company with efficient processes, and its operating leverage amplified its profits over the last five years
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 16.9% exceeded its revenue gains over the last five years
United Rentals is trading at $724.90 per share, or 15.9x forward P/E. Is now the right time to buy? See for yourself in our in-depth 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 9 Market-Beating Stocks. 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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free.
