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:
Caesars Entertainment (CZR)
Trailing 12-Month GAAP Operating Margin: 19.3%
Formerly Eldorado Resorts, Caesars Entertainment (NASDAQ: CZR) is a global gaming and hospitality company operating numerous casinos, hotels, and resort properties.
Why Is CZR Risky?
- Flat sales over the last two years suggest it must innovate and find new ways to grow
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
- High net-debt-to-EBITDA ratio of 7× could force the company to raise capital at unfavorable terms if market conditions deteriorate
Caesars Entertainment is trading at $24.48 per share, or 7.8x forward EV-to-EBITDA. If you’re considering CZR for your portfolio, see our FREE research report to learn more.
Lockheed Martin (LMT)
Trailing 12-Month GAAP Operating Margin: 8.3%
Headquartered in Maryland, Famous for the F-35 aircraft, Lockheed Martin (NYSE: LMT) specializes in defense, space, homeland security, and information technology products.
Why Do We Pass on LMT?
- Sales pipeline suggests its future revenue growth may not meet our standards as its average backlog growth of 6.8% for the past two years was weak
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 5.2% annually
- Eroding returns on capital suggest its historical profit centers are aging
At $579.50 per share, Lockheed Martin trades at 20.5x forward P/E. To fully understand why you should be careful with LMT, check out our full research report (it’s free).
One Stock to Buy:
Sterling (STRL)
Trailing 12-Month GAAP Operating Margin: 16.1%
Involved in the construction of a major highway, the Grand Parkway in Houston, TX, Sterling Infrastructure (NASDAQ: STRL) provides civil infrastructure construction.
Why Do We Love STRL?
- Annual revenue growth of 9.4% over the last five years beat the sector average and underscores the unique value of its offerings
- Free cash flow margin increased by 8.7 percentage points over the last five years, giving the company more capital to invest or return to shareholders
- Returns on capital are climbing as management makes more lucrative bets
Sterling’s stock price of $319.31 implies a valuation ratio of 28.1x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here 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 Exlservice (+354% five-year return). Find your next big winner with StockStory today.
