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.
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 leverages its financial strength to beat the competition and two best left off your watchlist.
Two Stocks to Sell:
USANA (USNA)
Trailing 12-Month GAAP Operating Margin: 4.6%
Going to market with a direct selling model rather than through traditional retailers, USANA Health Sciences (NYSE: USNA) manufactures and sells nutritional, personal care, and skincare products.
Why Does USNA Give Us Pause?
- Products aren't resonating with the market as its revenue declined by 4.2% annually over the last three years
- Projected sales decline of 1.4% over the next 12 months indicates demand will continue deteriorating
- Sales were less profitable over the last three years as its earnings per share fell by 20.9% annually, worse than its revenue declines
USANA is trading at $18.61 per share, or 9.9x forward P/E. Check out our free in-depth research report to learn more about why USNA doesn’t pass our bar.
Emerson Electric (EMR)
Trailing 12-Month GAAP Operating Margin: 20.1%
Founded in 1890, Emerson Electric (NYSE: EMR) is a multinational technology and engineering company providing solutions in the industrial, commercial, and residential markets.
Why Does EMR Fall Short?
- Annual sales growth of 1.4% over the last five years lagged behind its industrials peers as its large revenue base made it difficult to generate incremental demand
- Free cash flow margin dropped by 3 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Eroding returns on capital suggest its historical profit centers are aging
At $127.44 per share, Emerson Electric trades at 19.6x forward P/E. Dive into our free research report to see why there are better opportunities than EMR.
One Stock to Buy:
Trane Technologies (TT)
Trailing 12-Month GAAP Operating Margin: 18.8%
With low-pressure heating systems as its first product, Trane (NYSE: TT) designs, manufactures, and sells HVAC and refrigeration systems, the former to commercial and residential building customers and the latter to commercial truck manufacturers.
Why Will TT Beat the Market?
- Market share has increased this cycle as its 11.1% annual revenue growth over the last five years was exceptional
- Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- ROIC punches in at 24.3%, illustrating management’s expertise in identifying profitable investments, and its rising returns show it’s making even more lucrative bets
Trane Technologies’s stock price of $408.65 implies a valuation ratio of 28.3x 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 5 Growth Stocks for this month. 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-micro-cap company Tecnoglass (+1,754% 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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