Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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. Keeping that in mind, here is one profitable company that generates reliable profits without sacrificing growth and two best left off your watchlist.
Two Stocks to Sell:
onsemi (ON)
Trailing 12-Month GAAP Operating Margin: 10%
Spun out of Motorola in 1999 and built through a series of acquisitions, onsemi (NASDAQ: ON) is a global provider of analog chips specializing in autos, industrial applications, and power management in cloud data centers.
Why Is ON Not Exciting?
- Sales tumbled by 13.8% annually over the last two years, showing market trends are working against it during this cycle
- Estimated sales growth of 10.1% for the next 12 months is soft and implies weaker demand
- Gross margin of 39% reflects its high production costs
onsemi’s stock price of $89.94 implies a valuation ratio of 27.3x forward P/E. Read our free research report to see why you should think twice about including ON in your portfolio.
Trex (TREX)
Trailing 12-Month GAAP Operating Margin: 22.1%
Addressing the demand for aesthetically-pleasing and unique outdoor living spaces, Trex Company (NYSE: TREX) makes wood-alternative decking, railing, and patio furniture.
Why Are We Bearish on TREX?
- Annual sales declines of 2.1% for the past two years show its products and services struggled to connect with the market during this cycle
- Free cash flow margin dropped by 8 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Diminishing returns on capital suggest its earlier profit pools are drying up
At $42.85 per share, Trex trades at 24.4x forward P/E. To fully understand why you should be careful with TREX, check out our full research report (it’s free).
One Stock to Buy:
Sezzle (SEZL)
Trailing 12-Month GAAP Operating Margin: 40.7%
Founded in 2016 as an alternative to traditional credit cards for younger shoppers, Sezzle (NASDAQ: SEZL) provides a payment platform that allows consumers to split purchases into four interest-free installments over six weeks at participating retailers.
Why Will SEZL Outperform?
- Impressive 67.4% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Earnings growth has trumped its peers over the last one years as its EPS has compounded at 65% annually
Sezzle is trading at $159 per share, or 32.7x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
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.
