Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.
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 struggle to keep up.
Two Stocks to Sell:
American Woodmark (AMWD)
Trailing 12-Month GAAP Operating Margin: 5.2%
Starting as a small millwork shop, American Woodmark (NASDAQ: AMWD) is a cabinet manufacturing company that helps customers from inspiration to installation.
Why Are We Out on AMWD?
- Sales were flat over the last five years, indicating it’s failed to expand this cycle
- Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
- Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
At $63.33 per share, American Woodmark trades at 29.3x forward P/E. If you’re considering AMWD for your portfolio, see our FREE research report to learn more.
Progyny (PGNY)
Trailing 12-Month GAAP Operating Margin: 6.8%
Pioneering a data-driven approach to family building that has achieved an industry-leading patient satisfaction score of +80, Progyny (NASDAQ: PGNY) provides comprehensive fertility and family building benefits solutions to employers, helping employees access quality fertility treatments and support services.
Why Do We Think Twice About PGNY?
- Smaller revenue base of $1.27 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Low returns on capital reflect management’s struggle to allocate funds effectively
Progyny’s stock price of $24.19 implies a valuation ratio of 13.9x forward P/E. To fully understand why you should be careful with PGNY, check out our full research report (it’s free).
One Stock to Watch:
e.l.f. Beauty (ELF)
Trailing 12-Month GAAP Operating Margin: 9.8%
Short for "eyes, lips, face", e.l.f. Beauty (NYSE: ELF) is a developer of high-quality beauty products at accessible price points.
Why Is ELF Interesting?
- Annual revenue growth of 45.7% over the last three years was superb and indicates its market share is rising
- Earnings per share grew by 40.3% annually over the last three years and trumped its peers
- Free cash flow margin jumped by 8.4 percentage points over the last year, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
e.l.f. Beauty is trading at $89.25 per share, or 28.4x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
