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".
A business making money today isn’t necessarily a winner, which is why we analyze companies across multiple dimensions at StockStory. That said, here is one profitable company that leverages its financial strength to beat the competition and two best left off your watchlist.
Two Stocks to Sell:
Arhaus (ARHS)
Trailing 12-Month GAAP Operating Margin: 7.1%
With an aesthetic that features natural materials such as reclaimed wood, Arhaus (NASDAQ: ARHS) is a high-end furniture retailer that sells everything from sofas to rugs to bookcases.
Why Does ARHS Give Us Pause?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Subscale operations are evident in its revenue base of $1.36 billion, meaning it has fewer distribution channels than its larger rivals
- Revenue growth over the past three years was nullified by the company’s new share issuances as its earnings per share fell by 13.8% annually
Arhaus’s stock price of $11.36 implies a valuation ratio of 23.7x forward P/E. Check out our free in-depth research report to learn more about why ARHS doesn’t pass our bar.
Custom Truck One Source (CTOS)
Trailing 12-Month GAAP Operating Margin: 7.2%
Inspired by a family gas station, Custom Truck One Source (NYSE: CTOS) is a distributor of trucks and heavy equipment.
Why Does CTOS Fall Short?
- 2.9% annual revenue growth over the last two years was slower than its industrials peers
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
- Free cash flow margin shrank by 19.4 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
At $5.81 per share, Custom Truck One Source trades at 7.4x forward EV-to-EBITDA. If you’re considering CTOS for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
John Bean (JBTM)
Trailing 12-Month GAAP Operating Margin: 4.1%
Tracing back to its invention of the mechanical milk bottle filler in 1884, John Bean (NYSE: JBT) designs, manufactures, and sells equipment used for food processing and aviation.
Why Do We Like JBTM?
- Market share has increased this cycle as its 40% annual revenue growth over the last two years was exceptional
- Market share will likely rise over the next 12 months as its expected revenue growth of 21.3% is robust
- Earnings growth has trumped its peers over the last two years as its EPS has compounded at 16.3% annually
John Bean is trading at $150.67 per share, or 19.9x 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
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check 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 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-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.
