3 Profitable Stocks in Hot Water

Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages. Just because a business is in the green today doesn’t mean it will thrive tomorrow.

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 to steer clear of and a few better alternatives.

Akamai (AKAM)

Trailing 12-Month GAAP Operating Margin: 13%

Founded in 1999 by two engineers from MIT, Akamai (NASDAQ:AKAM) provides software for organizations to efficiently deliver web content to their customers.

Why Is AKAM Risky?

1. Muted 4.5% annual revenue growth over the last three years shows its demand lagged behind its software peers
2. Sky-high servicing costs result in an inferior gross margin of 59.1% that must be offset through increased usage
3. Competitive market means the company must spend more on sales and marketing to stand out even if the return on investment is low

Akamai is trading at $78.19 per share, or 2.8x forward price-to-sales. To fully understand why you should be careful with AKAM, check out our full research report (it’s free).

Vicor (VICR)

Trailing 12-Month GAAP Operating Margin: 4.9%

Founded by a researcher at the Massachusetts Institute of Technology, Vicor (NASDAQ:VICR) provides electrical power conversion and delivery products for a range of industries.

Why Is VICR Not Exciting?

1. Sales tumbled by 5% annually over the last two years, showing market trends are working against its favor during this cycle
2. Performance over the past two years was negatively impacted by new share issuances as its earnings per share dropped by 12.9% annually, worse than its revenue
3. Eroding returns on capital suggest its historical profit centers are aging

At $46.29 per share, Vicor trades at 28.3x forward P/E. Read our free research report to see why you should think twice about including VICR in your portfolio.

Covenant Logistics (CVLG)

Trailing 12-Month GAAP Operating Margin: 4.3%

Started with 25 trucks and 50 trailers, Covenant Logistics (NASDAQ:CVLG) is a provider of expedited long haul freight services, offering a range of logistics solutions.

Why Should You Sell CVLG?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 3% annually over the last two years
2. Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
3. 25 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

Covenant Logistics’s stock price of $23.02 implies a valuation ratio of 6.5x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why CVLG doesn’t pass our bar.

High-Quality Stocks for All Market Conditions

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.