Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.
Not all profitable companies are created equal, and that’s why we built StockStory - to help you find the ones that truly shine bright. That said, here are three profitable companies that don’t make the cut and some better opportunities instead.
Penumbra (PEN)
Trailing 12-Month GAAP Operating Margin: 13%
Founded in 2004 to address challenging medical conditions with significant unmet needs, Penumbra (NYSE:PEN) develops and manufactures innovative medical devices for treating vascular diseases and providing immersive healthcare rehabilitation solutions.
Why Is PEN Not Exciting?
- Revenue base of $1.33 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
Penumbra’s stock price of $305.50 implies a valuation ratio of 61.3x forward P/E. Read our free research report to see why you should think twice about including PEN in your portfolio.
Omnicell (OMCL)
Trailing 12-Month GAAP Operating Margin: 1.5%
Driven by the vision of an "Autonomous Pharmacy" with zero medication errors, Omnicell (NASDAQ:OMCL) provides medication management automation and adherence tools that help healthcare systems and pharmacies reduce errors and improve efficiency.
Why Should You Dump OMCL?
- Sales stagnated over the last two years and signal the need for new growth strategies
- Efficiency has decreased over the last five years as its adjusted operating margin fell by 9.5 percentage points
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 5.4% annually
Omnicell is trading at $44.30 per share, or 24.7x forward P/E. If you’re considering OMCL for your portfolio, see our FREE research report to learn more.
Perella Weinberg (PWP)
Trailing 12-Month GAAP Operating Margin: 6.7%
Founded in 2006 by veteran investment bankers Joseph Perella and Peter Weinberg during a wave of boutique advisory firm launches, Perella Weinberg Partners (NASDAQ:PWP) is a global independent advisory firm that provides strategic and financial advice to corporations, financial sponsors, and government institutions.
Why Do We Avoid PWP?
- Earnings per share have dipped by 30% annually over the past four years, which is concerning because stock prices follow EPS over the long term
- Push for growth has led to negative returns on capital, signaling value destruction
At $18.41 per share, Perella Weinberg trades at 15.5x forward P/E. Dive into our free research report to see why there are better opportunities than PWP.
Stocks We Like 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 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-small-cap company Exlservice (+354% 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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