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".
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:
TEGNA (TGNA)
Trailing 12-Month GAAP Operating Margin: 24.3%
Spun out of Gannett in 2015, TEGNA (NYSE: TGNA) is a media company operating a network of television stations and digital platforms, focusing on local news and community content.
Why Is TGNA Risky?
- Products and services aren't resonating with the market as its revenue declined by 2.5% annually over the last two years
- Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
- Projected 4.2 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
TEGNA is trading at $19.85 per share, or 10.9x forward P/E. Check out our free in-depth research report to learn more about why TGNA doesn’t pass our bar.
Ball (BALL)
Trailing 12-Month GAAP Operating Margin: 7.9%
Started with a $200 loan in 1880, Ball (NYSE: BLL) manufactures aluminum packaging for beverages, personal care, and household products as well as aerospace systems and other technologies.
Why Do We Avoid BALL?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Gross margin of 21.6% reflects its high production costs
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
At $49.09 per share, Ball trades at 12.9x forward P/E. Read our free research report to see why you should think twice about including BALL in your portfolio.
One Stock to Buy:
Instacart (CART)
Trailing 12-Month GAAP Operating Margin: 14.9%
Powering more than one billion grocery orders since its founding, Instacart (NASDAQ: CART) is an online grocery shopping and delivery platform that partners with retailers to help customers shop from local stores through its app or website.
Why Will CART Outperform?
- Annual revenue growth of 19.5% over the past three years was outstanding, reflecting market share gains
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 40.5% over the last three years outstripped its revenue performance
- Free cash flow margin jumped by 23.9 percentage points over the last few years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Instacart’s stock price of $37.70 implies a valuation ratio of 9.5x forward EV/EBITDA. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free for active Edge members.
Stocks We Like Even More
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).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% 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
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