Even if a company is profitable, it doesn’t always mean it’s a great investment. Some struggle to maintain growth, face looming threats, or fail to reinvest wisely, limiting their future potential.
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 is one profitable company that balances growth and profitability and two that may struggle to keep up.
Two Stocks to Sell:
Park-Ohio (PKOH)
Trailing 12-Month GAAP Operating Margin: 5.4%
Based in Cleveland, Park-Ohio (NASDAQ: PKOH) provides supply chain management services, capital equipment, and manufactured components.
Why Are We Cautious About PKOH?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last two years
- Gross margin of 15.4% is below its competitors, leaving less money to invest in areas like marketing and R&D
- Negative free cash flow raises questions about the return timeline for its investments
Park-Ohio is trading at $21.79 per share, or 6.5x forward P/E. Dive into our free research report to see why there are better opportunities than PKOH.
GEO Group (GEO)
Trailing 12-Month GAAP Operating Margin: 11.6%
With a global footprint spanning three continents and approximately 81,000 beds across 100 facilities, GEO Group (NYSE: GEO) operates secure facilities, processing centers, and reentry services for government agencies in the United States, Australia, and South Africa.
Why Are We Out on GEO?
- Flat sales over the last five years suggest it must find different ways to grow during this cycle
- Earnings per share fell by 12% annually over the last five years while its revenue was flat, showing each sale was less profitable
- Free cash flow margin dropped by 7.3 percentage points over the last five years, implying the company became more capital intensive as competition picked up
At $21.81 per share, GEO Group trades at 11.7x forward P/E. To fully understand why you should be careful with GEO, check out our full research report (it’s free).
One Stock to Watch:
Yelp (YELP)
Trailing 12-Month GAAP Operating Margin: 12.6%
Founded by PayPal alumni Jeremy Stoppelman and Russel Simmons, Yelp (NYSE: YELP) is an online platform that helps people discover local businesses through crowd-sourced reviews.
Why Are We Fans of YELP?
- Prominent and differentiated platform results in a best-in-class gross margin of 91.1%
- Highly efficient business model is illustrated by its impressive 26% EBITDA margin, and its operating leverage amplified its profits over the last few years
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 28.4% exceeded its revenue gains over the last three years
Yelp’s stock price of $31.22 implies a valuation ratio of 5.7x forward EV/EBITDA. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 5 Growth Stocks for this month. 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).
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