While profitability is essential, it doesn’t guarantee long-term success. Some companies that rest on their margins will lose ground as competition intensifies - as Jeff Bezos said, "Your margin is my opportunity".
A business making money today isn’t necessarily a winner, which is why we analyze companies across multiple dimensions at StockStory. Keeping that in mind, here is one profitable company that leverages its financial strength to beat the competition and two that may face some trouble.
Two Stocks to Sell:
C.H. Robinson Worldwide (CHRW)
Trailing 12-Month GAAP Operating Margin: 4.4%
Engaging in contracts with tens of thousands of transportation companies, C.H. Robinson (NASDAQ:CHRW) offers freight transportation and logistics services.
Why Do We Steer Clear of CHRW?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 8% annually over the last two years
- Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 7.3%
- Waning returns on capital imply its previous profit engines are losing steam
At $133.68 per share, C.H. Robinson Worldwide trades at 27.3x forward P/E. To fully understand why you should be careful with CHRW, check out our full research report (it’s free).
Revvity (RVTY)
Trailing 12-Month GAAP Operating Margin: 13.6%
Formerly known as PerkinElmer until its rebranding in 2023, Revvity (NYSE:RVTY) provides health science technologies and services that support the complete workflow from discovery to development and diagnosis to cure.
Why Should You Dump RVTY?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Adjusted operating profits fell over the last five years as its sales dropped and it struggled to adjust its fixed costs
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Revvity’s stock price of $91.60 implies a valuation ratio of 17.3x forward P/E. If you’re considering RVTY for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Ares (ARES)
Trailing 12-Month GAAP Operating Margin: 24%
With roots in the leveraged finance group of Apollo Management, Ares Management (NYSE:ARES) is an alternative investment firm that manages private equity, credit, real estate, and infrastructure assets for institutional and high-net-worth clients.
Why Will ARES Beat the Market?
- Market share has increased this cycle as its 19.7% annual revenue growth over the last five years was exceptional
- Fee-related earnings increased by 32.8% annually over the last five years as it refined its cost structure
- Earnings growth has comfortably beaten the peer group average over the last five years as its EPS has compounded at 17.3% annually
Ares is trading at $150 per share, or 26.4x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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