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.
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 are three profitable companies to steer clear of and a few better alternatives.
GoDaddy (GDDY)
Trailing 12-Month GAAP Operating Margin: 20.7%
Founded by Bob Parsons after selling his first company to Intuit, GoDaddy (NYSE: GDDY) provides small and mid-sized businesses with the ability to buy a web domain and tools to create and manage a website.
Why Does GDDY Worry Us?
- Underwhelming ARR growth of 7.8% over the last year suggests the company faced challenges in acquiring and retaining long-term customers
- Projected sales growth of 7.1% for the next 12 months suggests sluggish demand
- High servicing costs result in a relatively inferior gross margin of 64% that must be offset through increased usage
GoDaddy’s stock price of $175.71 implies a valuation ratio of 5.1x forward price-to-sales. Dive into our free research report to see why there are better opportunities than GDDY.
Clean Harbors (CLH)
Trailing 12-Month GAAP Operating Margin: 11%
Established in 1980, Clean Harbors (NYSE: CLH) provides environmental and industrial services like hazardous and non-hazardous waste disposal and emergency spill cleanups.
Why Does CLH Give Us Pause?
- 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
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
- Free cash flow margin dropped by 5.3 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Clean Harbors is trading at $230.49 per share, or 29.1x forward P/E. Check out our free in-depth research report to learn more about why CLH doesn’t pass our bar.
LeMaitre (LMAT)
Trailing 12-Month GAAP Operating Margin: 23.4%
Founded in 1983 and named after a pioneering vascular surgeon, LeMaitre Vascular (NASDAQGM:LMAT) develops and manufactures specialized medical devices used by vascular surgeons to treat peripheral vascular disease and other circulatory conditions.
Why Are We Wary of LMAT?
- Modest revenue base of $226.3 million gives it less fixed cost leverage and fewer distribution channels than larger companies
- Free cash flow margin shrank by 8.9 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
At $84.55 per share, LeMaitre trades at 36.5x forward P/E. To fully understand why you should be careful with LMAT, check out our full research report (it’s free).
High-Quality Stocks for All Market Conditions
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 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-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
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
