Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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 best left off your watchlist.
Two Stocks to Sell:
U.S. Physical Therapy (USPH)
Trailing 12-Month GAAP Operating Margin: 10.7%
With a nationwide footprint spanning 671 clinics across 42 states, U.S. Physical Therapy (NYSE: USPH) operates a network of outpatient physical therapy clinics and provides industrial injury prevention services to employers across the United States.
Why Are We Wary of USPH?
- Subscale operations are evident in its revenue base of $795.5 million, meaning it has fewer distribution channels than its larger rivals
- Earnings per share were flat over the last five years while its revenue grew, showing its incremental sales were less profitable
- Waning returns on capital imply its previous profit engines are losing steam
At $71.34 per share, U.S. Physical Therapy trades at 23.1x forward P/E. To fully understand why you should be careful with USPH, check out our full research report (it’s free).
Insight Enterprises (NSIT)
Trailing 12-Month GAAP Operating Margin: 4.2%
With over 35 years of IT expertise and partnerships with more than 8,000 technology providers, Insight Enterprises (NASDAQ: NSIT) provides end-to-end digital transformation solutions that help businesses modernize their IT infrastructure and maximize the value of technology.
Why Do We Avoid NSIT?
- Sales were flat over the last five years, indicating it’s failed to expand this cycle
- Anticipated sales growth of 1.7% for the next year implies demand will be shaky
- Earnings per share have contracted by 17% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
Insight Enterprises is trading at $113.57 per share, or 10.3x forward P/E. Check out our free in-depth research report to learn more about why NSIT doesn’t pass our bar.
One Stock to Buy:
LPL Financial (LPLA)
Trailing 12-Month GAAP Operating Margin: 9%
As the nation's largest independent broker-dealer with no proprietary products of its own, LPL Financial (NASDAQ: LPLA) provides technology, compliance, and business support services to independent financial advisors and institutions who manage investments for retail clients.
What Makes LPLA Stand Out?
- Annual revenue growth of 32.1% over the last two years was superb and indicates its market share increased during this cycle
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Industry-leading 37.3% return on equity demonstrates management’s skill in finding high-return investments
LPL Financial’s stock price of $329.18 implies a valuation ratio of 12.9x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
