1 Profitable Stock with Exciting Potential and 2 We Avoid

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. That said, here is one profitable company that balances growth and profitability and two best left off your watchlist.

Two Stocks to Sell:

WESCO (WCC)

Trailing 12-Month GAAP Operating Margin: 5.3%

Based in Pittsburgh, WESCO (NYSE:WCC) provides electrical, industrial, and communications products and augments them with services such as supply chain management.

Why Are We Wary of WCC?

1. Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
2. Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
3. Low free cash flow margin of 1.6% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders

WESCO is trading at $285.96 per share, or 18.4x forward P/E. If you’re considering WCC for your portfolio, see our FREE research report to learn more.

Horace Mann Educators (HMN)

Trailing 12-Month GAAP Operating Margin: 12.2%

Founded in 1945 and named after the 19th-century education reformer known as the "father of American public education," Horace Mann Educators (NYSE:HMN) is an insurance company that specializes in providing auto, property, life, and retirement products tailored for educators and other public service employees.

Why Do We Think HMN Will Underperform?

1. Sluggish 5.3% annualized growth in net premiums earned over the last five years indicates the firm trailed its insurance peers
2. Book value per share tumbled by 3.2% annually over the last five years, showing insurance sector trends are working against its favor during this cycle
3. Low return on equity reflects management’s struggle to allocate funds effectively

Horace Mann Educators’s stock price of $42.72 implies a valuation ratio of 1.2x forward P/B. Check out our free in-depth research report to learn more about why HMN doesn’t pass our bar.

One Stock to Buy:

Trane Technologies (TT)

Trailing 12-Month GAAP Operating Margin: 18.8%

With low-pressure heating systems as its first product, Trane (NYSE:TT) designs, manufactures, and sells HVAC and refrigeration systems, the former to commercial and residential building customers and the latter to commercial truck manufacturers.

Why Will TT Beat the Market?

1. Annual revenue growth of 11.1% over the past five years was outstanding, reflecting market share gains this cycle
2. Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
3. Industry-leading 24.3% return on capital demonstrates management’s skill in finding high-return investments, and its returns are growing as it capitalizes on even better market opportunities

At $384.95 per share, Trane Technologies trades at 27.2x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.

Stocks We Like Even More

Check out the high-quality names we’ve flagged in our 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 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.