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 best left off your watchlist.
Two Stocks to Sell:
CarMax (KMX)
Trailing 12-Month GAAP Operating Margin: 2.8%
Known for its transparent, customer-centric approach and wide selection of vehicles, Carmax (NYSE: KMX) is the largest automotive retailer in the United States.
Why Is KMX Risky?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
- Gross margin of 11% is an output of its commoditized inventory
At $45.19 per share, CarMax trades at 19.4x forward P/E. Dive into our free research report to see why there are better opportunities than KMX.
MGP Ingredients (MGPI)
Trailing 12-Month GAAP Operating Margin: 1.8%
Headquartered in Atchison, Kansas, MGP Ingredients (NASDAQ: MGPI) is a leading supplier of high-quality ingredients to the food and beverage industry
Why Do We Steer Clear of MGPI?
- Annual revenue declines of 8.6% over the last three years indicate problems with its market positioning
- Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
- Operating margin declined by 18.3 percentage points over the last year as its sales cratered
MGP Ingredients’s stock price of $25.39 implies a valuation ratio of 10.9x forward P/E. If you’re considering MGPI for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Pure Storage (PSTG)
Trailing 12-Month GAAP Operating Margin: 2%
Founded in 2009 as a pioneer in enterprise all-flash storage technology, Pure Storage (NYSE: PSTG) provides all-flash data storage hardware and software that helps organizations manage their data more efficiently across on-premises and cloud environments.
Why Are We Backing PSTG?
- ARR trends over the past two years show it’s maintaining a steady flow of long-term contracts that contribute positively to its revenue predictability
- Additional sales over the last five years increased its profitability as the 44.3% annual growth in its earnings per share outpaced its revenue
- PSTG is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its growing cash flow gives it even more resources to deploy
Pure Storage is trading at $68.09 per share, or 32.2x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here 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 (+1,326% 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.
