Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.
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 avoid and some better opportunities instead.
Hudson Technologies (HDSN)
Trailing 12-Month GAAP Operating Margin: 11.3%
Founded in 1991, Hudson Technologies (NASDAQ: HDSN) specializes in refrigerant services and solutions, providing refrigerant sales, reclamation, and recycling.
Why Are We Hesitant About HDSN?
- Sales tumbled by 9.9% annually over the last two years, showing market trends are working against its favor during this cycle
- Earnings per share have contracted by 33.8% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
- Diminishing returns on capital suggest its earlier profit pools are drying up
At $6.70 per share, Hudson Technologies trades at 1.2x forward price-to-sales. Dive into our free research report to see why there are better opportunities than HDSN.
Cummins (CMI)
Trailing 12-Month GAAP Operating Margin: 11.7%
With more than half of the heavy-duty truck market using its engines at one point, Cummins (NYSE: CMI) offers engines and power systems.
Why Are We Cautious About CMI?
- Sales were flat over the last two years, indicating it’s failed to expand this cycle
- Estimated sales growth of 1.4% for the next 12 months is soft and implies weaker demand
- Eroding returns on capital suggest its historical profit centers are aging
Cummins is trading at $454.85 per share, or 19.7x forward P/E. Check out our free in-depth research report to learn more about why CMI doesn’t pass our bar.
AGNC Investment (AGNC)
Trailing 12-Month GAAP Operating Margin: 87.7%
Born during the 2008 financial crisis when mortgage markets were in turmoil, AGNC Investment (NASDAQ: AGNC) is a real estate investment trust that primarily invests in mortgage-backed securities guaranteed by U.S. government agencies or enterprises.
Why Do We Steer Clear of AGNC?
- Annual sales declines of 51.9% for the past five years show its products and services struggled to connect with the market during this cycle
- Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
- Tangible book value per share tumbled by 12.2% annually over the last five years, showing banking sector trends are working against its favor during this cycle
AGNC Investment’s stock price of $10.11 implies a valuation ratio of 1.1x forward P/B. To fully understand why you should be careful with AGNC, check out our full research report (it’s free for active Edge members).
High-Quality Stocks for All Market Conditions
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in 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 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-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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