Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages. Just because a business is in the green today doesn’t mean it will thrive tomorrow.
Profits are valuable, but they’re not everything. At StockStory, we help you identify the companies that have real staying power. That said, here are three profitable companies to steer clear of and a few better alternatives.
Rush Enterprises (RUSHA)
Trailing 12-Month GAAP Operating Margin: 5.8%
Headquartered in Texas, Rush Enterprises (NASDAQ:RUSH.A) provides truck-related services and solutions, including sales, leasing, parts, and maintenance for commercial vehicles.
Why Do We Avoid RUSHA?
- Muted 2.2% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
- Forecasted revenue decline of 1.5% for the upcoming 12 months implies demand will fall off a cliff
- Earnings per share have contracted by 10% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
Rush Enterprises’s stock price of $49.87 implies a valuation ratio of 8x forward EV-to-EBITDA. To fully understand why you should be careful with RUSHA, check out our full research report (it’s free).
ESAB (ESAB)
Trailing 12-Month GAAP Operating Margin: 16.4%
Having played a significant role in the construction of the iconic Sydney Opera House, ESAB (NYSE:ESAB) manufactures and sells welding and cutting equipment for numerous industries.
Why Is ESAB Not Exciting?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 2.9%
- Earnings growth underperformed the sector average over the last three years as its EPS grew by just 4.4% annually
At $124.24 per share, ESAB trades at 23.2x forward P/E. Dive into our free research report to see why there are better opportunities than ESAB.
Orion (ORN)
Trailing 12-Month GAAP Operating Margin: 1.5%
Established in 1994, Orion (NYSE:ORN) provides construction services for marine infrastructure and industrial projects.
Why Do We Pass on ORN?
- Muted 2.4% annual revenue growth over the last five years shows its demand lagged behind its industrials peers
- Earnings per share fell by 10.1% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
Orion is trading at $8.52 per share, or 52.3x forward P/E. Read our free research report to see why you should think twice about including ORN in your portfolio.
Stocks We Like More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our 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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free.