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.

Ford (F)

Trailing 12-Month GAAP Operating Margin: 2.4%

Established to make automobiles accessible to a broader segment of the population, Ford (NYSE:F) designs, manufactures, and sells a variety of automobiles, trucks, and electric vehicles.

Why Should You Dump F?

1. Flat vehicles sold over the past two years suggest it might have to lower prices to accelerate growth
2. 13.4 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. High net-debt-to-EBITDA ratio of 8× could force the company to raise capital at unfavorable terms if market conditions deteriorate

Ford is trading at $10.64 per share, or 7.8x forward P/E. Dive into our free research report to see why there are better opportunities than F.

Dave & Buster's (PLAY)

Trailing 12-Month GAAP Operating Margin: 9.4%

Founded by a former game parlor and bar operator, Dave & Buster’s (NASDAQ:PLAY) operates a chain of arcades providing immersive entertainment experiences.

Why Do We Think Twice About PLAY?

1. Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its stores
2. Cash burn makes us question whether it can achieve sustainable long-term growth
3. Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders

At $31.33 per share, Dave & Buster's trades at 14.3x forward P/E. If you’re considering PLAY for your portfolio, see our FREE research report to learn more.

Bausch + Lomb (BLCO)

Trailing 12-Month GAAP Operating Margin: 1.5%

With a nearly 170-year history dedicated to vision care and eye health innovation, Bausch + Lomb (NYSE:BLCO) develops and manufactures a comprehensive range of eye health products including contact lenses, pharmaceuticals, surgical devices, and consumer eye care solutions.

Why Does BLCO Fall Short?

1. Muted 5.3% annual revenue growth over the last five years shows its demand lagged behind its healthcare peers
2. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 20.6 percentage points
3. Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution

Bausch + Lomb’s stock price of $12.07 implies a valuation ratio of 15.2x forward P/E. To fully understand why you should be careful with BLCO, check out our full research report (it’s free).

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 9 Market-Beating Stocks. 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-small-cap company Exlservice (+354% 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