Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages. Just because a business is in the green today doesn’t mean it will thrive tomorrow.
Not all profitable companies are created equal, and that’s why we built StockStory - to help you find the ones that truly shine bright. Keeping that in mind, here is one profitable company that generates reliable profits without sacrificing growth and two that may face some trouble.
Two Stocks to Sell:
CDW (CDW)
Trailing 12-Month GAAP Operating Margin: 7.4%
Serving as a crucial bridge between technology manufacturers and end users since 1984, CDW (NASDAQ: CDW) is a multi-brand provider of information technology solutions that helps businesses and public sector organizations select, implement, and manage hardware, software, and IT services.
Why Is CDW Not Exciting?
- Sales stagnated over the last two years and signal the need for new growth strategies
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 2.1%
- Flat earnings per share over the last two years lagged its peers
CDW is trading at $144.97 per share, or 14.7x forward P/E. Read our free research report to see why you should think twice about including CDW in your portfolio.
Selective Insurance Group (SIGI)
Trailing 12-Month GAAP Operating Margin: 9.8%
Founded in 1926 during the early days of automobile insurance, Selective Insurance Group (NASDAQ: SIGI) is a property and casualty insurance company that sells commercial, personal, and excess and surplus lines insurance products through independent agents.
Why Does SIGI Give Us Pause?
- Day-to-day expenses have swelled relative to revenue over the last five years as its combined ratio increased by 2.3 percentage points
- Annual earnings per share growth of 9.2% underperformed its revenue over the last two years, showing its incremental sales were less profitable
- Capital trends were unexciting over the last five years as its 6.4% annual book value per share growth was below the typical insurance firm
Selective Insurance Group’s stock price of $82.28 implies a valuation ratio of 1.5x forward P/B. Dive into our free research report to see why there are better opportunities than SIGI.
One Stock to Buy:
Palantir Technologies (PLTR)
Trailing 12-Month GAAP Operating Margin: 21.8%
Named after the all-seeing stones in "Lord of the Rings," Palantir Technologies (NASDAQ: PLTR) develops software platforms that help government agencies and enterprises integrate, analyze, and operationalize their data for decision-making.
Why Will PLTR Beat the Market?
- Billings have averaged 52.2% growth over the last year, showing it’s securing new contracts that could potentially increase in value over time
- Software platform has product-market fit given the rapid recovery of its customer acquisition costs
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
At $182.62 per share, Palantir Technologies trades at 83.1x forward price-to-sales. Is now the time to initiate a position? See for yourself in our full 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 6 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 (+1,326% between June 2020 and June 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. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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