Even if a company is profitable, it doesn’t always mean it’s a great investment. Some struggle to maintain growth, face looming threats, or fail to reinvest wisely, limiting their future potential.
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 leverages its financial strength to beat the competition and two that may struggle to keep up.
Two Stocks to Sell:
Victoria's Secret (VSCO)
Trailing 12-Month GAAP Operating Margin: 4.5%
Spun off from L Brands in 2020, Victoria’s Secret (NYSE: VSCO) is an intimate clothing and beauty retailer that sells its own brands of lingerie, undergarments, and personal fragrances.
Why Are We Out on VSCO?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
- Operating margin of 4.5% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
- Earnings per share have dipped by 23.9% annually over the past three years, which is concerning because stock prices follow EPS over the long term
At $23 per share, Victoria's Secret trades at 12.3x forward P/E. Dive into our free research report to see why there are better opportunities than VSCO.
MRC Global (MRC)
Trailing 12-Month GAAP Operating Margin: 3%
Producing bomb casings and tracks for vehicles during WWII, MRC (NYSE: MRC) offers pipes, valves, and fitting products for various industries.
Why Should You Dump MRC?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last five years
- Issuance of new shares over the last two years caused its earnings per share to fall by 36.4% annually, even worse than its revenue declines
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 5.1 percentage points
MRC Global is trading at $14.67 per share, or 11.9x forward P/E. To fully understand why you should be careful with MRC, check out our full research report (it’s free).
One Stock to Watch:
RLI (RLI)
Trailing 12-Month GAAP Operating Margin: 23.4%
Founded in 1965 and named after its original focus on "replacement lens insurance" for contact lens wearers, RLI (NYSE: RLI) is a specialty insurance company that underwrites property, casualty, and surety products through wholesale brokers, independent agents, and carrier partnerships.
Why Is RLI on Our Radar?
- Market share has increased this cycle as its 14.6% annual revenue growth over the last five years was exceptional
- Net premiums earned surged by 13.9% annually over the past two years, reflecting strong market share gains this cycle
- Market-beating return on equity illustrates that management has a knack for investing in profitable ventures
RLI’s stock price of $67.17 implies a valuation ratio of 3.8x forward P/B. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 6 Stocks for this week. 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-small-cap company Exlservice (+354% 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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