A company with profits isn’t always a great investment. Some struggle to maintain growth, face looming threats, or fail to reinvest wisely, limiting their future potential.
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 leverages its financial strength to beat the competition and two best left off your watchlist.
Two Stocks to Sell:
Skyworks Solutions (SWKS)
Trailing 12-Month GAAP Operating Margin: 13.8%
Result of a merger of Alpha Industries and the wireless communications division of Conexant, Skyworks Solutions (NASDAQ: SWKS) is a designer and manufacturer of chips used in smartphones, autos, and industrial applications to amplify, filter, and process wireless signals.
Why Are We Out on SWKS?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 12.7% annually over the last two years
- Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
- Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 16 percentage points
Skyworks Solutions is trading at $61.85 per share, or 11.4x forward price-to-earnings. Check out our free in-depth research report to learn more about why SWKS doesn’t pass our bar.
Hasbro (HAS)
Trailing 12-Month GAAP Operating Margin: 17.5%
Credited with the creation of toys such as Mr. Potato Head and the Rubik’s Cube, Hasbro (NASDAQ:HAS) is a global entertainment company offering a diverse range of toys, games, and multimedia experiences for children and families.
Why Do We Pass on HAS?
- Annual revenue declines of 3.5% over the last five years indicate problems with its market positioning
- Persistent operating losses suggest the business manages its expenses poorly
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Hasbro’s stock price of $60.77 implies a valuation ratio of 14.6x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than HAS.
One Stock to Watch:
DoubleVerify (DV)
Trailing 12-Month GAAP Operating Margin: 12.5%
When Oren Netzer saw a digital ad for US-based Target while sitting in his Tel Aviv apartment, he knew there was an unsolved problem, so he started DoubleVerify (NYSE:DV), a provider of advertising solutions to businesses that helps with ad verification, fraud prevention, and brand safety.
Why Are We Positive On DV?
- Net revenue retention rate of 119% demonstrates its ability to expand within existing accounts through upsells and cross-sells
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
- Disciplined cost controls and effective management resulted in a strong trailing 12-month operating margin of 12.5%
At $13.11 per share, DoubleVerify trades at 3.2x forward price-to-sales. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.