3 Profitable Stocks in Hot Water

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

Hyatt Hotels (H)

Trailing 12-Month GAAP Operating Margin: 6.6%

Founded in 1957, Hyatt Hotels (NYSE:H) is a global hospitality company with a portfolio of 20 premier brands and over 950 properties across 65 countries.

Why Do We Steer Clear of H?

1. Revenue per room has disappointed over the past two years due to weaker trends in its daily rates and occupancy levels
2. Projected sales growth of 3.4% for the next 12 months suggests sluggish demand
3. Negative returns on capital show that some of its growth strategies have backfired

At $126.95 per share, Hyatt Hotels trades at 39.6x forward P/E. If you’re considering H for your portfolio, see our FREE research report to learn more.

Jacobs Solutions (J)

Trailing 12-Month GAAP Operating Margin: 6.7%

With a workforce of approximately 45,000 professionals tackling complex challenges from water scarcity to cybersecurity, Jacobs Solutions (NYSE:J) provides engineering, consulting, and technical services focused on infrastructure, sustainability, and advanced technology solutions.

Why Are We Out on J?

1. Sales were flat over the last two years, indicating it’s failed to expand this cycle
2. Sales pipeline suggests its future revenue growth likely won’t meet our standards as its backlog hasn’t budged over the past two years
3. Incremental sales over the last five years were much less profitable as its earnings per share fell by 2.2% annually while its revenue grew

Jacobs Solutions’s stock price of $122.95 implies a valuation ratio of 19.1x forward P/E. To fully understand why you should be careful with J, check out our full research report (it’s free).

Brink's (BCO)

Trailing 12-Month GAAP Operating Margin: 11.2%

Known for its iconic armored trucks that have been a fixture in American cities since 1859, Brink's (NYSE:BCO) provides secure transportation and management of cash and valuables for banks, retailers, and other businesses worldwide.

Why Do We Think Twice About BCO?

1. Demand is forecasted to shrink as its estimated sales for the next 12 months are flat
2. 1.3 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
3. Below-average returns on capital indicate management struggled to find compelling investment opportunities

Brink's is trading at $93.19 per share, or 13.3x forward P/E. Read our free research report to see why you should think twice about including BCO in your portfolio.

Stocks We Like More

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.