3 Profitable Stocks Walking a Fine Line

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 are three profitable companies that don’t make the cut and some better opportunities instead.

Illinois Tool Works (ITW)

Trailing 12-Month GAAP Operating Margin: 26.3%

Founded by Byron Smith, an investor who held over 100 patents, Illinois Tool Works (NYSE:ITW) manufactures engineered components and specialized equipment for numerous industries.

Why Does ITW Worry Us?

1. Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
2. Estimated sales growth of 3.2% for the next 12 months is soft and implies weaker demand
3. Earnings per share lagged its peers over the last two years as they only grew by 3.8% annually

At $299.56 per share, Illinois Tool Works trades at 26.6x forward P/E. If you’re considering ITW for your portfolio, see our FREE research report to learn more.

Solventum (SOLV)

Trailing 12-Month GAAP Operating Margin: 26.1%

Founded in 1985, Solventum (NYSE:SOLV) develops, manufactures, and commercializes a portfolio of healthcare products and services addressing critical customer and therapeutic patient needs.

Why Should You Sell SOLV?

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. Projected sales decline of 5.2% for the next 12 months points to a tough demand environment ahead
3. 30.1 percentage point decline in its free cash flow margin over the last four years reflects the company’s increased investments to defend its market position

Solventum’s stock price of $75.51 implies a valuation ratio of 12.2x forward P/E. To fully understand why you should be careful with SOLV, check out our full research report (it’s free).

Addus HomeCare (ADUS)

Trailing 12-Month GAAP Operating Margin: 9.2%

Serving approximately 66,000 clients across 22 states with a focus on "dual eligible" Medicare and Medicaid beneficiaries, Addus HomeCare (NASDAQ:ADUS) provides in-home personal care, hospice, and home health services to elderly, chronically ill, and disabled individuals.

Why Are We Wary of ADUS?

1. Smaller revenue base of $1.35 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy

Addus HomeCare is trading at $113.75 per share, or 16.8x forward P/E. Check out our free in-depth research report to learn more about why ADUS doesn’t pass our bar.

High-Quality Stocks for All Market Conditions

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 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 Kadant (+351% five-year return). Find your next big winner with StockStory today.