Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.
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 face some trouble.
Two Stocks to Sell:
Kennametal (KMT)
Trailing 12-Month GAAP Operating Margin: 7.3%
Involved in manufacturing hard tips of anti-tank projectiles in World War II, Kennametal (NYSE: KMT) is a provider of industrial materials and tools for various sectors.
Why Is KMT Risky?
- Annual sales declines of 2.3% for the past two years show its products and services struggled to connect with the market during this cycle
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable
Kennametal’s stock price of $33.60 implies a valuation ratio of 20.2x forward P/E. If you’re considering KMT for your portfolio, see our FREE research report to learn more.
Nasdaq (NDAQ)
Trailing 12-Month GAAP Operating Margin: 43.6%
Originally founded in 1971 as the world's first electronic stock market, Nasdaq (NASDAQ: NDAQ) operates global exchanges and provides technology, data, and corporate services that help companies, investors, and financial institutions navigate capital markets.
Why Are We Cautious About NDAQ?
- Incremental sales over the last two years were less profitable as its 9.2% annual earnings per share growth lagged its revenue gains
Nasdaq is trading at $97.58 per share, or 26.9x forward P/E. To fully understand why you should be careful with NDAQ, check out our full research report (it’s free).
One Stock to Watch:
Barrett (BBSI)
Trailing 12-Month GAAP Operating Margin: 5.3%
Operating as a professional employer organization (PEO) that serves over 8,000 companies with more than 120,000 worksite employees, Barrett Business Services (NASDAQ: BBSI) provides management solutions that help small and mid-sized businesses handle human resources, payroll, workers' compensation, and other administrative functions.
Why Do We Like BBSI?
- Annual revenue growth of 7.2% over the last two years beat the sector average and underscores the unique value of its offerings
- Share buybacks propelled its annual earnings per share growth to 10.9%, which outperformed its revenue gains over the last five years
- ROIC punches in at 54.6%, illustrating management’s expertise in identifying profitable investments
At $37.84 per share, Barrett trades at 17x forward P/E. Is now the time to initiate a position? 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 9 Market-Beating Stocks. 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 Kadant (+351% five-year return). Find your next big winner with StockStory today.
