1 Profitable Stock on Our Buy List and 2 We Brush Off

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 that may face some trouble.

Two Stocks to Sell:

LKQ (LKQ)

Trailing 12-Month GAAP Operating Margin: 7.4%

A global distributor of vehicle parts and accessories, LKQ (NASDAQ:LKQ) offers its customers a comprehensive selection of high-quality, affordably priced automobile products.

Why Is LKQ Risky?

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. Free cash flow margin is expected to remain in place over the coming year
3. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value

At $31.84 per share, LKQ trades at 10.6x forward P/E. Read our free research report to see why you should think twice about including LKQ in your portfolio.

WillScot Mobile Mini (WSC)

Trailing 12-Month GAAP Operating Margin: 8%

Originally focusing on mobile offices for construction sites, WillScot (NASDAQ:WSC) provides ready-to-use temporary spaces, largely for longer-term lease.

Why Do We Think WSC Will Underperform?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 1.8% annually over the last two years
2. Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 10.5 percentage points
3. Earnings per share fell by 1.6% annually over the last five years while its revenue grew, partly because it diluted shareholders

WillScot Mobile Mini’s stock price of $20.05 implies a valuation ratio of 20.1x forward P/E. If you’re considering WSC for your portfolio, see our FREE research report to learn more.

One Stock to Buy:

AutoZone (AZO)

Trailing 12-Month GAAP Operating Margin: 18.1%

Aiming to be a one-stop shop for the DIY customer, AutoZone (NYSE:AZO) is an auto parts and accessories retailer that sells everything from car batteries to windshield wiper fluid to brake pads.

Why Are We Bullish on AZO?

1. Same-store sales growth averaged 2.7% over the past two years, showing it’s bringing new and repeat shoppers into its stores
2. Excellent operating margin of 19.2% highlights the efficiency of its business model
3. Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures

AutoZone is trading at $3,745 per share, or 23x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.

Stocks We Like Even More

ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum — both boxes checked at the same time.

Find out which stocks our AI platform is flagging this week. See this week's Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.

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.