1 Profitable Stock with Exciting Potential and 2 We Find Risky

Even if a company is profitable, it doesn’t always mean it’s a great investment. Some struggle to maintain growth, face looming threats, or fail to reinvest wisely, limiting their future potential.

A business making money today isn’t necessarily a winner, which is why we analyze companies across multiple dimensions at StockStory. Keeping that in mind, here is one profitable company that balances growth and profitability and two best left off your watchlist.

Two Stocks to Sell:

Sally Beauty (SBH)

Trailing 12-Month GAAP Operating Margin: 8.9%

Catering to both everyday consumers as well as salon professionals, Sally Beauty (NYSE:SBH) is a retailer that sells salon-quality beauty products such as makeup and haircare products.

Why Is SBH Risky?

1. Dearth of new stores suggests management is prioritizing the optimization of its existing locations over growth
2. Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
3. Smaller revenue base of $3.70 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy

At $16.62 per share, Sally Beauty trades at 8.1x forward P/E. If you’re considering SBH for your portfolio, see our FREE research report to learn more.

Western Union (WU)

Trailing 12-Month GAAP Operating Margin: 18.5%

With a history dating back to 1851 when it began as a telegraph company, Western Union (NYSE:WU) is a global money transfer service that enables consumers and businesses to send funds across borders and currencies, typically within minutes.

Why Do We Avoid WU?

1. Sales tumbled by 2.9% annually over the last five years, showing market trends are working against its favor during this cycle
2. Earnings per share have contracted by 1.1% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance

Western Union is trading at $9.99 per share, or 5.6x forward P/E. To fully understand why you should be careful with WU, check out our full research report (it’s free).

One Stock to Buy:

Robinhood (HOOD)

Trailing 12-Month GAAP Operating Margin: 47.6%

With a mission to democratize finance, Robinhood (NASDAQ:HOOD) is an online consumer finance platform known for its commission-free stock and crypto trading.

Why Will HOOD Beat the Market?

1. Customer spending is rising as the company has focused on monetization over the last two years, leading to 47.7% annual growth in its average revenue per user
2. Incremental sales over the last three years have been highly profitable as its earnings per share increased by 58.5% annually, topping its revenue gains
3. Robust free cash flow margin of 49.6% gives it many options for capital deployment, and its growing cash flow gives it even more resources to deploy

Robinhood’s stock price of $70.64 implies a valuation ratio of 22.8x forward EV/EBITDA. Is now the right time to buy? Find out in our full research report, it’s free.

Stocks We Like Even More

If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.

Don’t wait for the next volatility shock. Check out 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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.