Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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 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:
Camping World (CWH)
Trailing 12-Month GAAP Operating Margin: 3.2%
Founded in 1966 as a single recreational vehicle (RV) dealership, Camping World (NYSE: CWH) still sells RVs along with boats and general merchandise for outdoor activities.
Why Does CWH Fall Short?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Earnings per share have dipped by 43.4% annually over the past five years, which is concerning because stock prices follow EPS over the long term
- 8× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Camping World is trading at $17.60 per share, or 17.5x forward P/E. To fully understand why you should be careful with CWH, check out our full research report (it’s free).
Cadre (CDRE)
Trailing 12-Month GAAP Operating Margin: 11%
Originally known as Safariland, Cadre (NYSE: CDRE) specializes in manufacturing and distributing safety and survivability equipment for first responders.
Why Are We Hesitant About CDRE?
- Expenses have increased as a percentage of revenue over the last five years as its operating margin fell by 1.7 percentage points
- Earnings per share were flat over the last four years and fell short of the peer group average
- 7 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
Cadre’s stock price of $32.85 implies a valuation ratio of 22.1x forward P/E. If you’re considering CDRE for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
DXP (DXPE)
Trailing 12-Month GAAP Operating Margin: 8.7%
Founded during the emergence of Big Oil in Texas, DXP (NASDAQ: DXPE) provides pumps, valves, and other industrial components.
Why Are We Positive On DXPE?
- Offerings and unique value proposition resonate with customers, as seen in its above-market 10.4% annual sales growth over the last five years
- Operating margin expanded by 5.2 percentage points over the last five years as it scaled and became more efficient
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 32.6% exceeded its revenue gains over the last two years
At $115.34 per share, DXP trades at 20.4x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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