Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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. That said, here is one profitable company that generates reliable profits without sacrificing growth and two that may struggle to keep up.
Two Stocks to Sell:
Chewy (CHWY)
Trailing 12-Month GAAP Operating Margin: 2.5%
Founded by Ryan Cohen, who later became known for his involvement in GameStop, Chewy (NYSE: CHWY) is an online retailer specializing in pet food, supplies, and healthcare services.
Why Does CHWY Fall Short?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 6.5% over the last three years was below our standards for the consumer internet sector
- Estimated sales growth of 7% for the next 12 months is soft and implies weaker demand
- Gross margin of 29.7% reflects its high servicing costs
Chewy’s stock price of $18.87 implies a valuation ratio of 8.2x forward EV/EBITDA. To fully understand why you should be careful with CHWY, check out our full research report (it’s free).
Wendy's (WEN)
Trailing 12-Month GAAP Operating Margin: 13.6%
Founded by Dave Thomas in 1969, Wendy’s (NASDAQ: WEN) is a renowned fast-food chain known for its fresh, never-frozen beef burgers, flavorful menu options, and commitment to quality.
Why Should You Sell WEN?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new diners into its restaurants
- Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 3.4 percentage points
- 8× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
At $6.22 per share, Wendy's trades at 12.7x forward P/E. Check out our free in-depth research report to learn more about why WEN doesn’t pass our bar.
One Stock to Buy:
McKesson (MCK)
Trailing 12-Month GAAP Operating Margin: 1.6%
With roots dating back to 1833, making it one of America's oldest continuously operating businesses, McKesson (NYSE: MCK) is a healthcare services company that distributes pharmaceuticals, medical supplies, and provides technology solutions to pharmacies, hospitals, and healthcare providers.
Why Should You Buy MCK?
- Offerings and unique value proposition resonate with customers, as seen in its above-market 14.5% annual sales growth over the last two years
- Massive revenue base of $411 billion in a highly regulated sector makes the company difficult to replace, giving it meaningful negotiating power
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 15.3% exceeded its revenue gains over the last five years
McKesson is trading at $930.67 per share, or 19.5x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum 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 Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
