1 Profitable Stock for Long-Term Investors 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".

Not all profitable companies are created equal, and that’s why we built StockStory - to help you find the ones that truly shine bright. That said, here is one profitable company that balances growth and profitability and two that may face some trouble.

Two Stocks to Sell:

Timken (TKR)

Trailing 12-Month GAAP Operating Margin: 12%

Established after the founder noticed the difficulty freight wagons had making sharp turns, Timken (NYSE:TKR) is a provider of industrial parts used across various sectors.

Why Is TKR Risky?

1. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
2. Estimated sales growth of 2.5% for the next 12 months is soft and implies weaker demand
3. Earnings per share have dipped by 11.8% annually over the past two years, which is concerning because stock prices follow EPS over the long term

Timken’s stock price of $93.93 implies a valuation ratio of 16.5x forward P/E. Dive into our free research report to see why there are better opportunities than TKR.

Pitney Bowes (PBI)

Trailing 12-Month GAAP Operating Margin: 15.1%

With a century-long history dating back to 1920 and processing over 15 billion pieces of mail annually, Pitney Bowes (NYSE:PBI) provides shipping, mailing technology, logistics, and financial services to businesses of all sizes.

Why Are We Hesitant About PBI?

1. Sales tumbled by 10.5% annually over the last five years, showing market trends are working against its favor during this cycle
2. Forecasted revenue decline of 4% for the upcoming 12 months implies demand will fall even further
3. Poor free cash flow margin of 3.7% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends

Pitney Bowes is trading at $10.22 per share, or 7.3x forward P/E. Check out our free in-depth research report to learn more about why PBI doesn’t pass our bar.

One Stock to Watch:

Ulta (ULTA)

Trailing 12-Month GAAP Operating Margin: 13.1%

Offering high-end prestige brands as well as lower-priced, mass-market ones, Ulta Beauty (NASDAQ:ULTA) is an American retailer that sells makeup, skincare, haircare, and fragrance products.

Why Are We Fans of ULTA?

1. Same-store sales provide a solid foundation for the steady expansion of its stores
2. Same-store sales growth averaged 2.6% over the past two years, showing it’s bringing new and repeat shoppers into its stores
3. Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures

At $685.06 per share, Ulta trades at 24.9x forward P/E. Is now a good time to buy? Find out 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 9 Market-Beating Stocks. 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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.