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.
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 is one profitable company that leverages its financial strength to beat the competition and two best left off your watchlist.
Two Stocks to Sell:
Calavo (CVGW)
Trailing 12-Month GAAP Operating Margin: 3.6%
A trailblazer in the avocado industry, Calavo Growers (NASDAQ:CVGW) is a pioneering California-based provider of high-quality avocados and other fresh food products.
Why Are We Hesitant About CVGW?
- Annual sales declines of 14.7% for the past three years show its products struggled to connect with the market
- Smaller revenue base of $688.3 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Gross margin of 10.6% is below its competitors, leaving less money to invest in areas like marketing and production facilities
Calavo is trading at $26.82 per share, or 16x forward price-to-earnings. If you’re considering CVGW for your portfolio, see our FREE research report to learn more.
J. M. Smucker (SJM)
Trailing 12-Month GAAP Operating Margin: 3.8%
Best known for its fruit jams and spreads, J.M Smucker (NYSE:SJM) is a packaged foods company whose products span from peanut butter and coffee to pet food.
Why Does SJM Fall Short?
- Muted 3.7% annual revenue growth over the last three years shows its demand lagged behind its consumer staples peers
- Sales are projected to remain flat over the next 12 months as demand decelerates from its three-year trend
- Underwhelming 4.1% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its decreasing returns suggest its historical profit centers are aging
At $116.98 per share, J. M. Smucker trades at 11.4x forward price-to-earnings. Check out our free in-depth research report to learn more about why SJM doesn’t pass our bar.
One Stock to Buy:
FTAI Aviation (FTAI)
Trailing 12-Month GAAP Operating Margin: 12.6%
With a focus on the CFM56 engine that powers Boeing and Airbus’s planes, FTAI Aviation (NASDAQ:FTAI) sells, leases, maintains, and repairs aircraft engines.
Why Will FTAI Outperform?
- Annual revenue growth of 56.5% over the past two years was outstanding, reflecting market share gains this cycle
- Additional sales over the last two years increased its profitability as the 102% annual growth in its earnings per share outpaced its revenue
- Cash-burning tendencies have improved over the last five years, showing it could become financially independent one day
FTAI Aviation’s stock price of $101 implies a valuation ratio of 22.7x forward price-to-earnings. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out 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 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.