While profitability is essential, it doesn’t guarantee long-term success. Some companies that rest on their margins will lose ground as competition intensifies - as Jeff Bezos said, "Your margin is my opportunity".
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 face some trouble.
Two Stocks to Sell:
Williams-Sonoma (WSM)
Trailing 12-Month GAAP Operating Margin: 18.6%
Started in 1956 as a store specializing in French cookware, Williams-Sonoma (NYSE: WSM) is a specialty retailer of higher-end kitchenware, home goods, and furniture.
Why Do We Think Twice About WSM?
- Store closures and disappointing same-store sales suggest demand is sluggish and it’s rightsizing its operations
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Earnings growth over the last three years fell short of the peer group average as its EPS only increased by 3.3% annually
Williams-Sonoma is trading at $188 per share, or 21.4x forward P/E. If you’re considering WSM for your portfolio, see our FREE research report to learn more.
Paramount (PSKY)
Trailing 12-Month GAAP Operating Margin: 4.8%
Owner of Spongebob Squarepants and formerly known as ViacomCBS, Paramount Global (NASDAQ: PARA) is a major media conglomerate offering television, film production, and digital content across various global platforms.
Why Do We Think PSKY Will Underperform?
- Annual sales growth of 3.2% over the last five years lagged behind its consumer discretionary peers as its large revenue base made it difficult to generate incremental demand
- Free cash flow margin is forecasted to shrink by 5 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
At $13.76 per share, Paramount trades at 15.1x forward P/E. Check out our free in-depth research report to learn more about why PSKY doesn’t pass our bar.
One Stock to Watch:
AZZ (AZZ)
Trailing 12-Month GAAP Operating Margin: 15.3%
Responsible for projects like nuclear facilities, AZZ (NYSE: AZZ) is a provider of metal coating and power infrastructure solutions.
Why Could AZZ Be a Winner?
- Excellent operating margin of 15% highlights the efficiency of its business model, and its rise over the last five years was fueled by some leverage on its fixed costs
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 26% outpaced its revenue gains
- Free cash flow margin grew by 23 percentage points over the last five years, giving the company more chips to play with
AZZ’s stock price of $107.23 implies a valuation ratio of 17.7x forward P/E. 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
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 6 Stocks for this week. 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 Kadant (+351% 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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