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.
A business making money today isn’t necessarily a winner, which is why we analyze companies across multiple dimensions at StockStory. Keeping that in mind, here is one profitable company that balances growth and profitability and two that may struggle to keep up.
Two Stocks to Sell:
Taylor Morrison Home (TMHC)
Trailing 12-Month GAAP Operating Margin: 14.7%
Named “America’s Most Trusted Home Builder” in 2019, Taylor Morrison Home (NYSE:TMHC) builds single family homes and communities across the United States.
Why Are We Cautious About TMHC?
- Backlog has dropped by 14.5% on average over the past two years, suggesting it’s losing orders as competition picks up
- Sales are projected to tank by 13.6% over the next 12 months as demand evaporates
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 2.6% annually
At $61.43 per share, Taylor Morrison Home trades at 9.5x forward P/E. Check out our free in-depth research report to learn more about why TMHC doesn’t pass our bar.
Ziff Davis (ZD)
Trailing 12-Month GAAP Operating Margin: 12%
Originally a pioneering technology publisher founded in 1927 that became famous for PC Magazine, Ziff Davis (NASDAQ:ZD) operates a portfolio of digital media brands and subscription services across technology, shopping, gaming, healthcare, and cybersecurity markets.
Why Are We Out on ZD?
- Flat sales over the last five years suggest it must find different ways to grow during this cycle
- Sales over the last five years were less profitable as its earnings per share fell by 2.2% annually while its revenue was flat
- 14.9 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
Ziff Davis’s stock price of $31.92 implies a valuation ratio of 4.4x forward P/E. If you’re considering ZD for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
Carvana (CVNA)
Trailing 12-Month GAAP Operating Margin: 9.4%
Known for its glass tower car vending machines, Carvana (NYSE:CVNA) provides a convenient automotive shopping experience by offering an online platform for buying and selling used cars.
Why Should CVNA Be on Your Watchlist?
- Retail Units Sold have grown by 31.4% annually, allowing for more profitable cross-selling opportunities if it can build complementary products and features
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 38.5% over the last three years outstripped its revenue performance
- Free cash flow margin increased by 19.3 percentage points over the last few years, giving the company more capital to invest or return to shareholders
Carvana is trading at $320.70 per share, or 16.7x forward EV/EBITDA. Is now the time to initiate a position? Find out in our full 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 6 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 Exlservice (+354% 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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