- LIVE QUOTES
- LEARN
- HELP
Nasdaq
Wall Street JournalEN
3 Profitable Stocks We’re Skeptical Of
Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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. That said, here are three profitable companies to avoid and some better opportunities instead.
Bentley Systems (BSY)
Trailing 12-Month GAAP Operating Margin: 23.7%
Pioneering the concept of "digital twins" for infrastructure projects long before it became an industry buzzword, Bentley Systems (NASDAQ:BSY) provides software solutions that help engineers design, build, and operate infrastructure projects across sectors including roads, bridges, utilities, mining, and industrial facilities.
Why Are We Hesitant About BSY?
- Products, pricing, or go-to-market strategy may need some adjustments as its 10.9% average billings growth over the last year was weak
- Estimated sales growth of 9.7% for the next 12 months is soft and implies weaker demand
- Operating margin expanded by 2.5 percentage points over the last year as it scaled and became more efficient
Bentley Systems’s stock price of $38.34 implies a valuation ratio of 7.9x forward price-to-sales. Dive into our free research report to see why there are better opportunities than BSY.
Tesla (TSLA)
Trailing 12-Month GAAP Operating Margin: 4.7%
Originally founded by Martin Eberhard and Marc Tarpenning in 2003, Tesla (NASDAQ:TSLA) is an electric vehicle company accelerating the world’s transition to sustainable energy.
Why Do We Avoid TSLA?
- Tesla's scale advantage in EV production leads to gross margins that exceed incumbents such as General Motors and Ford. However, a softer macroeconomic backdrop and tariff pressures have weighed on automobile sales, which are highly cyclical.
- The company's execution ability is a question mark given its long history of delays, such as the Cybertruck and Robotaxi launches. Its sizeable investments in projects with uncertain return timelines, like Optimus, also raise skepticism from investors.
- On the bright side, Tesla's Megapack product solves a critical problem for utilities needing renewable energy storage solutions. This innovation has made the energy segment the most profitable and fastest-growing business line for the company.
At $449.59 per share, Tesla trades at 222.6x forward price-to-earnings. If you’re considering TSLA for your portfolio, see our FREE research report to learn more.
Oracle (ORCL)
Trailing 12-Month GAAP Operating Margin: 30.3%
Starting as a database company in 1977 and now powering mission-critical systems across the globe, Oracle (NYSE:ORCL) provides enterprise software and hardware products and services that help businesses manage their information technology needs.
Why Are We Out on ORCL?
- Customers had second thoughts about committing to its platform over the last year as its average billings growth of 10.4% underwhelmed
- Projected 11 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
Oracle is trading at $193.55 per share, or 7.6x forward price-to-sales. Check out our free in-depth research report to learn more about why ORCL doesn’t pass our bar.
Stocks We Like More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.