Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.
Profits are valuable, but they’re not everything. At StockStory, we help you identify the companies that have real staying power. Keeping that in mind, here is one profitable company that generates reliable profits without sacrificing growth and two that may struggle to keep up.
Two Stocks to Sell:
CSX (CSX)
Trailing 12-Month GAAP Operating Margin: 33.4%
Established as part of the Chessie System and Seaboard Coast Line Industries merger, CSX (NASDAQ: CSX) is a transportation company specializing in freight rail services.
Why Do We Pass on CSX?
- Flat unit sales over the past two years imply it may need to invest in improvements to get back on track
- Sales were less profitable over the last two years as its earnings per share fell by 3.4% annually, worse than its revenue declines
- 15.3 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
CSX’s stock price of $47.24 implies a valuation ratio of 23.9x forward P/E. Read our free research report to see why you should think twice about including CSX in your portfolio.
Liberty Energy (LBRT)
Trailing 12-Month GAAP Operating Margin: 1.9%
Operating approximately 40 active fleets across North America's most productive shale basins, Liberty Energy (NYSE: LBRT) provides hydraulic fracturing services that help oil and gas companies extract resources from shale formations.
Why Do We Think Twice About LBRT?
- High extraction costs and unfavorable asset economics are reflected in its low gross margin of 23.3%
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 2.3% for the last five years
Liberty Energy is trading at $28.76 per share, or 106.8x forward P/E. Dive into our free research report to see why there are better opportunities than LBRT.
One Stock to Buy:
Charles Schwab (SCHW)
Trailing 12-Month GAAP Operating Margin: 49.1%
Founded in 1971 as a disruptive force challenging Wall Street's high fees and limited access, Charles Schwab (NYSE: SCHW) is a wealth management and brokerage firm that provides investment services, banking, and financial advice to individual investors and independent advisors.
Why Should You Buy SCHW?
- Annual revenue growth of 15.9% over the past two years was outstanding, reflecting market share gains this cycle
- Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Stellar return on equity showcases management’s ability to surface highly profitable business ventures
At $88.49 per share, Charles Schwab trades at 13.8x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
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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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
