Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.
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:
Shutterstock (SSTK)
Trailing 12-Month GAAP Operating Margin: 3.6%
Originally featuring a library that included many of founder Jon Oringer’s photos, Shutterstock (NYSE: SSTK) is now a digital platform where customers can license and use hundreds of millions of pieces of content.
Why Do We Pass on SSTK?
- Preference for prioritizing user growth over monetization has led to 87.9% annual drops in its average revenue per request
- Estimated sales decline of 19% for the next 12 months implies a challenging demand environment
- Earnings per share fell by 6.3% annually over the last three years while its revenue grew, showing its incremental sales were much less profitable
At $13.22 per share, Shutterstock trades at 1.1x forward price-to-gross profit. If you’re considering SSTK for your portfolio, see our FREE research report to learn more.
NOV (NOV)
Trailing 12-Month GAAP Operating Margin: 4.5%
With roots stretching back to 1862 when it began making equipment for early oil fields, NOV (NYSE: NOV) manufactures drilling rigs, drill bits, pumps, and other equipment used to drill oil and gas wells.
Why Should You Sell NOV?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 3.3% annually over the last ten years
- Costly operations and weak unit economics result in an inferior gross margin of 20.3% that must be offset through higher production volumes
- Low free cash flow margin of 3.4% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
NOV is trading at $18.72 per share, or 18.5x forward P/E. Dive into our free research report to see why there are better opportunities than NOV.
One Stock to Buy:
AppLovin (APP)
Trailing 12-Month GAAP Operating Margin: 77.1%
Sitting at the crossroads of the mobile advertising ecosystem with over 200 free-to-play games in its portfolio, AppLovin (NASDAQ: APP) provides software solutions that help mobile app developers market, monetize, and grow their apps through AI-powered advertising and analytics tools.
Why Will APP Outperform?
- Annual revenue growth of 30.4% over the last two years was superb and indicates its market share is rising
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
- Robust free cash flow margin of 71.9% gives it many options for capital deployment
AppLovin’s stock price of $469.36 implies a valuation ratio of 17.9x forward price-to-sales. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
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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.
