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".
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 balances growth and profitability and two that may face some trouble.
Two Stocks to Sell:
Hyatt Hotels (H)
Trailing 12-Month GAAP Operating Margin: 4.9%
Founded in 1957, Hyatt Hotels (NYSE: H) is a global hospitality company with a portfolio of 20 premier brands and over 950 properties across 65 countries.
Why Do We Think H Will Underperform?
- Revenue per room has underperformed over the past two years, suggesting it may need to develop new facilities
- Operating margin of 4.8% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
- Poor free cash flow margin of 5.1% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
Hyatt Hotels’s stock price of $161.40 implies a valuation ratio of 47.9x forward P/E. Check out our free in-depth research report to learn more about why H doesn’t pass our bar.
General Motors (GM)
Trailing 12-Month GAAP Operating Margin: 4.3%
Founded in 1908 by William C. Durant, General Motors (NYSE: GM) offers a range of vehicles and automobiles through brands such as Chevrolet, Buick, GMC, and Cadillac.
Why Does GM Worry Us?
- Underwhelming unit sales over the past two years indicate demand is soft and that the company may need to revise its strategy
- Projected sales decline of 1.1% for the next 12 months points to a tough demand environment ahead
- Gross margin of 12.2% is below its competitors, leaving less money to invest in areas like marketing and R&D
At $80.93 per share, General Motors trades at 7.4x forward P/E. To fully understand why you should be careful with GM, check out our full research report (it’s free for active Edge members).
One Stock to Buy:
Astronics (ATRO)
Trailing 12-Month GAAP Operating Margin: 7.2%
Integrating power outlets into many Boeing aircraft, Astronics (NASDAQ: ATRO) is a provider of technologies and services to the global aerospace, defense, and electronics industries.
Why Will ATRO Beat the Market?
- Annual revenue growth of 12.9% over the past two years was outstanding, reflecting market share gains this cycle
- Free cash flow margin grew by 10.4 percentage points over the last five years, giving the company more chips to play with
- Historical investments are beginning to pay off as its returns on capital are growing
Astronics is trading at $55.33 per share, or 22.4x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even 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 9 Market-Beating Stocks. 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
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