Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.
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:
Regal Rexnord (RRX)
Trailing 12-Month GAAP Operating Margin: 11%
Headquartered in Milwaukee, Regal Rexnord (NYSE: RRX) provides power transmission and industrial automation products.
Why Are We Hesitant About RRX?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Earnings per share were flat over the last two years and fell short of the peer group average
- ROIC of 5% reflects management’s challenges in identifying attractive investment opportunities, and its falling returns suggest its earlier profit pools are drying up
At $141.43 per share, Regal Rexnord trades at 12.9x forward P/E. Read our free research report to see why you should think twice about including RRX in your portfolio.
ICU Medical (ICUI)
Trailing 12-Month GAAP Operating Margin: 5.6%
Founded in 1984 and named for its initial focus on intensive care units, ICU Medical (NASDAQ: ICUI) develops and manufactures medical products for infusion therapy, vascular access, and vital care applications used in hospitals and other healthcare settings.
Why Should You Dump ICUI?
- Sales trends were unexciting over the last two years as its 1.5% annual growth was below the typical healthcare company
- Projected sales decline of 8.5% for the next 12 months points to a tough demand environment ahead
- Free cash flow margin dropped by 11.3 percentage points over the last five years, implying the company became more capital intensive as competition picked up
ICU Medical’s stock price of $141.58 implies a valuation ratio of 19.4x forward P/E. Dive into our free research report to see why there are better opportunities than ICUI.
One Stock to Watch:
Sprouts (SFM)
Trailing 12-Month GAAP Operating Margin: 7.7%
Playing on the secular trend of healthier living, Sprouts Farmers Market (NASDAQ: SFM) is a grocery store chain emphasizing natural and organic products.
Why Does SFM Stand Out?
- Offensive push to build new stores and attack its untapped market opportunities is backed by its same-store sales growth
- Same-store sales growth averaged 7.7% over the past two years, showing it’s bringing new and repeat shoppers into its stores
- Market share will likely rise over the next 12 months as its expected revenue growth of 8.7% is robust
Sprouts is trading at $85.06 per share, or 15.4x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
Stocks We Like Even More
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 Strong Momentum Stocks for this week. 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-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
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
