3 Profitable Stocks We Steer Clear Of

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 are three profitable companies to steer clear of and a few better alternatives.

eHealth (EHTH)

Trailing 12-Month GAAP Operating Margin: 9.4%

Aiming to address a high-stakes and often confusing decision, eHealth (NASDAQ:EHTH) guides consumers through health insurance enrollment and related topics.

Why Is EHTH Not Exciting?

1. Estimated Membership have declined by 2.2% annually over the last two years, suggesting it may need to revamp its features or user experience to stay competitive
2. Sales are projected to tank by 2.5% over the next 12 months as demand evaporates
3. Cash burn makes us question whether it can achieve sustainable long-term growth

eHealth’s stock price of $3.92 implies a valuation ratio of 2.9x forward EV/EBITDA. Check out our free in-depth research report to learn more about why EHTH doesn’t pass our bar.

Hudson Technologies (HDSN)

Trailing 12-Month GAAP Operating Margin: 8.8%

Founded in 1991, Hudson Technologies (NASDAQ:HDSN) specializes in refrigerant services and solutions, providing refrigerant sales, reclamation, and recycling.

Why Are We Hesitant About HDSN?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 14.1% annually over the last two years
2. Earnings per share have contracted by 46.8% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
3. Eroding returns on capital suggest its historical profit centers are aging

Hudson Technologies is trading at $9.84 per share, or 10.9x forward EV-to-EBITDA. To fully understand why you should be careful with HDSN, check out our full research report (it’s free).

West Pharmaceutical Services (WST)

Trailing 12-Month GAAP Operating Margin: 19.6%

Founded in 1923 and serving as a critical link in the pharmaceutical supply chain, West Pharmaceutical Services (NYSE:WST) manufactures specialized packaging, containment systems, and delivery devices for injectable drugs and healthcare products.

Why Are We Wary of WST?

1. Sales trends were unexciting over the last two years as its 1.6% annual growth was below the typical healthcare company
2. Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 3.9 percentage points
3. Waning returns on capital imply its previous profit engines are losing steam

At $261.52 per share, West Pharmaceutical Services trades at 39x forward P/E. If you’re considering WST for your portfolio, see our FREE research report to learn more.

High-Quality Stocks for All Market Conditions

When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.

Don’t let fear keep you from great opportunities and take a look at 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 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 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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