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 generates reliable profits without sacrificing growth and two that may face some trouble.
Two Stocks to Sell:
Starbucks (SBUX)
Trailing 12-Month GAAP Operating Margin: 7.2%
Started by three friends in Seattle’s historic Pike Place Market, Starbucks (NASDAQ: SBUX) is a globally-renowned coffeehouse chain that offers a wide selection of high-quality coffee, beverages, and food items.
Why Do We Think SBUX Will Underperform?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new restaurants
- Efficiency has decreased over the last year as its operating margin fell by 6.8 percentage points
- Earnings per share fell by 5.9% annually over the last six years while its revenue grew, showing its incremental sales were much less profitable
Starbucks is trading at $95.47 per share, or 38.4x forward P/E. Check out our free in-depth research report to learn more about why SBUX doesn’t pass our bar.
CBRE (CBRE)
Trailing 12-Month GAAP Operating Margin: 4.3%
Established in 1906, CBRE (NYSE: CBRE) is one of the largest commercial real estate services firms in the world.
Why Are We Out on CBRE?
- Annual sales growth of 11.2% over the last five years lagged behind its consumer discretionary peers as its large revenue base made it difficult to generate incremental demand
- Forecasted free cash flow margin suggests the company will fail to improve its cash conversion over the next year
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
CBRE’s stock price of $149.09 implies a valuation ratio of 20.2x forward P/E. Dive into our free research report to see why there are better opportunities than CBRE.
One Stock to Buy:
EVERTEC (EVTC)
Trailing 12-Month GAAP Operating Margin: 21.2%
Operating one of Latin America's leading PIN debit networks called ATH, EVERTEC (NYSE: EVTC) is a payment transaction processor and financial technology provider that enables merchants and financial institutions across Latin America and the Caribbean to accept and process electronic payments.
Why Will EVTC Outperform?
- Annual revenue growth of 16.8% over the past two years was outstanding, reflecting market share gains this cycle
- Annual earnings per share growth of 12.5% over the last five years modestly outpaced its peers
- Market-beating return on equity illustrates that management has a knack for investing in profitable ventures
At $27.08 per share, EVERTEC trades at 7.3x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
