1 Profitable Stock for Long-Term Investors and 2 Facing Headwinds

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".

Profits are valuable, but they’re not everything. At StockStory, we help you identify the companies that have real staying power. Keeping that in mind, here is one profitable company that generates reliable profits without sacrificing growth and two best left off your watchlist.

Two Stocks to Sell:

Columbia Sportswear (COLM)

Trailing 12-Month GAAP Operating Margin: 6.6%

Originally founded as a hat store in 1938, Columbia Sportswear (NASDAQ:COLM) is a manufacturer of outerwear, sportswear, and footwear designed for outdoor enthusiasts.

Why Is COLM Risky?

1. Constant currency growth was below our standards over the past two years, suggesting it might need to invest in product improvements to get back on track
2. Low free cash flow margin of 9.7% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

Columbia Sportswear is trading at $55.31 per share, or 19.8x forward P/E. If you’re considering COLM for your portfolio, see our FREE research report to learn more.

Phibro Animal Health (PAHC)

Trailing 12-Month GAAP Operating Margin: 11.4%

With a portfolio of approximately 800 product lines serving farmers and veterinarians in 90 countries, Phibro Animal Health (NASDAQ:PAHC) develops, manufactures, and markets health products for livestock and companion animals, including antibacterials, vaccines, nutritional supplements, and mineral additives.

Why Do We Think Twice About PAHC?

1. Smaller revenue base of $1.4 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
2. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 1.2% for the last five years

At $39.43 per share, Phibro Animal Health trades at 13.7x forward P/E. Check out our free in-depth research report to learn more about why PAHC doesn’t pass our bar.

One Stock to Buy:

Houlihan Lokey (HLI)

Trailing 12-Month GAAP Operating Margin: 20.1%

Founded in 1972 and known for its expertise in complex financial situations, Houlihan Lokey (NYSE:HLI) is a global investment bank specializing in mergers and acquisitions, capital markets, financial restructurings, and valuation advisory services.

Why Will HLI Beat the Market?

1. Impressive 19.9% annual revenue growth over the last two years indicates it’s winning market share this cycle
2. Incremental sales significantly boosted profitability as its annual earnings per share growth of 33.5% over the last two years outstripped its revenue performance
3. Impressive 42.9% annual tangible book value per share growth over the last two years indicates it’s building equity value this cycle

Houlihan Lokey’s stock price of $183.01 implies a valuation ratio of 22.8x 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

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 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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.