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. That said, here is one profitable company that balances growth and profitability and two that may face some trouble.
Two Stocks to Sell:
The ONE Group (STKS)
Trailing 12-Month GAAP Operating Margin: 4.9%
Doubling as a hospitality services provider for hotels and resorts, The One Group Hospitality (NASDAQ:STKS) is an upscale restaurant company that operates STK Steakhouse and Kona Grill.
Why Should You Sell STKS?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new diners into its restaurants
- Earnings per share fell by 54.6% annually over the last six years while its revenue grew, showing its incremental sales were much less profitable
- High net-debt-to-EBITDA ratio of 7× increases the risk of forced asset sales or dilutive financing if operational performance weakens
At $1.86 per share, The ONE Group trades at 4.9x forward P/E. Dive into our free research report to see why there are better opportunities than STKS.
Interface (TILE)
Trailing 12-Month GAAP Operating Margin: 11.5%
Pioneering carbon-neutral flooring since its founding in 1973, Interface (NASDAQ:TILE) is a global manufacturer of modular carpet tiles, luxury vinyl tile (LVT), and rubber flooring that specializes in carbon-neutral and sustainable flooring solutions.
Why Are We Wary of TILE?
- Sales trends were unexciting over the last five years as its 3.3% annual growth was below the typical business services company
- Anticipated sales growth of 4.4% for the next year implies demand will be shaky
- Earnings growth underperformed the sector average over the last five years as its EPS grew by just 6.2% annually
Interface is trading at $27.86 per share, or 13.7x forward P/E. Check out our free in-depth research report to learn more about why TILE doesn’t pass our bar.
One Stock to Buy:
Nova (NVMI)
Trailing 12-Month GAAP Operating Margin: 29.1%
Headquartered in Israel, Nova (NASDAQ:NVMI) is a provider of quality control systems used in semiconductor manufacturing.
Why Will NVMI Outperform?
- Annual revenue growth of 26.3% over the last two years was superb and indicates its market share increased during this cycle
- Earnings growth has massively outpaced its peers over the last five years as its EPS has compounded at 33.1% annually
- NVMI is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
Nova’s stock price of $333.32 implies a valuation ratio of 37.4x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
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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