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 balances growth and profitability and two best left off your watchlist.
Two Stocks to Sell:
Arhaus (ARHS)
Trailing 12-Month GAAP Operating Margin: 6.8%
With an aesthetic that features natural materials such as reclaimed wood, Arhaus (NASDAQ:ARHS) is a high-end furniture retailer that sells everything from sofas to rugs to bookcases.
Why Is ARHS Not Exciting?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Smaller revenue base of $1.34 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Earnings per share have contracted by 10.2% annually over the last three years, a headwind for returns as stock prices often echo long-term EPS performance
At $10.13 per share, Arhaus trades at 22.8x forward P/E. Dive into our free research report to see why there are better opportunities than ARHS.
Anheuser-Busch (BUD)
Trailing 12-Month GAAP Operating Margin: 26.2%
Born out of a complicated web of mergers and acquisitions, Anheuser-Busch InBev (NYSE:BUD) boasts a powerhouse beer portfolio of Budweiser, Stella Artois, Corona, and local favorites around the world.
Why Does BUD Give Us Pause?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 1.2% over the last three years was below our standards for the consumer staples sector
- Declining unit sales over the past two years indicate demand is soft and that the company may need to revise its product strategy
- 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
Anheuser-Busch is trading at $60.49 per share, or 5.6x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why BUD doesn’t pass our bar.
One Stock to Buy:
Palomar Holdings (PLMR)
Trailing 12-Month GAAP Operating Margin: 28.9%
Founded in 2013 to fill gaps in catastrophe insurance markets, Palomar Holdings (NASDAQ:PLMR) is a specialty insurance provider that offers property and casualty insurance products in underserved markets, with a focus on earthquake coverage.
Why Will PLMR Outperform?
- Net premiums earned surged by 38.3% annually over the past two years, reflecting strong market share gains this cycle
- Balance sheet strength has increased this cycle as its 37.7% annual book value per share growth over the last two years was exceptional
- Book value per share outlook for the upcoming 12 months is outstanding and shows it’s on track to build significant equity value
Palomar Holdings’s stock price of $120 implies a valuation ratio of 3.4x forward P/B. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
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 9 Market-Beating Stocks. 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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