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1 Profitable Stock with Competitive Advantages and 2 Facing Challenges
Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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 best left off your watchlist.
Two Industrials Stocks to Sell:
Griffon (GFF)
Trailing 12-Month GAAP Operating Margin: 20.8%
Initially in the defense industry, Griffon (NYSE:GFF) is a now diversified company specializing in home improvement, professional equipment, and building products.
Why Are We Cautious About GFF?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 4.4% annually over the last five years
- Projected sales decline of 6.7% over the next 12 months indicates demand will continue deteriorating
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 7% annually
Griffon is trading at $93.08 per share, or 15.8x forward P/E. If you’re considering GFF for your portfolio, see our FREE research report to learn more.
Waste Connections (WCN)
Trailing 12-Month GAAP Operating Margin: 17%
Operating a network of municipal solid waste landfills in the U.S. and Canada, Waste Connections (NYSE:WCN) is North America's third-largest waste management company providing collection, disposal, and recycling services.
Why Does WCN Fall Short?
- Estimated sales growth of 5.8% for the next 12 months implies demand will slow from its two-year trend
- 2.5 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
- Low returns on capital reflect management’s struggle to allocate funds effectively, and its decreasing returns suggest its historical profit centers are aging
At $154.38 per share, Waste Connections trades at 26.6x forward P/E. Dive into our free research report to see why there are better opportunities than WCN.
One Industrials Stock to Watch:
Zurn Elkay (ZWS)
Trailing 12-Month GAAP Operating Margin: 20.8%
Claiming to have saved more than 30 billion gallons of water, Zurn Elkay (NYSE:ZWS) provides water management solutions to various industries.
Why Are We Fans of ZWS?
- Solid 9.6% annual revenue growth over the last five years indicates its offerings solve complex business issues
- Operating margin improvement of 6.3 percentage points over the last five years demonstrates its ability to scale efficiently
- Robust free cash flow margin of 15.8% gives it many options for capital deployment, and its rising cash conversion increases its margin of safety
Zurn Elkay’s stock price of $46.46 implies a valuation ratio of 24x 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 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth 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.