Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.
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 are three profitable companies to steer clear of and a few better alternatives.
Power Integrations (POWI)
Trailing 12-Month GAAP Operating Margin: 1.2%
A leading supplier of parts for electronics such as home appliances, Power Integrations (NASDAQ:POWI) is a semiconductor designer and developer specializing in products used for high-voltage power conversion.
Why Is POWI Risky?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last five years
- Projected sales growth of 1.8% for the next 12 months suggests sluggish demand
- Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 22.1 percentage points
At $34.76 per share, Power Integrations trades at 30.8x forward P/E. If you’re considering POWI for your portfolio, see our FREE research report to learn more.
FedEx (FDX)
Trailing 12-Month GAAP Operating Margin: 6%
Sporting one of the largest air cargo fleets in the world, FedEx (NYSE:FDX) is a global provider of parcel and cargo delivery services.
Why Should You Dump FDX?
- Sales were flat over the last two years, indicating it’s failed to expand this cycle
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
FedEx is trading at $267.64 per share, or 14.4x forward P/E. Check out our free in-depth research report to learn more about why FDX doesn’t pass our bar.
Ingram Micro (INGM)
Trailing 12-Month GAAP Operating Margin: 1.6%
Operating as the crucial link in the global technology supply chain with a presence in 57 countries, Ingram Micro (NYSE:INGM) is a global technology distributor that connects manufacturers with resellers, providing hardware, software, cloud services, and logistics expertise.
Why Is INGM Not Exciting?
- Annual sales growth of 2.2% over the last five years lagged behind its business services peers as its large revenue base made it difficult to generate incremental demand
- Earnings per share fell by 7.8% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of -0.1% for the last five years
Ingram Micro’s stock price of $20.46 implies a valuation ratio of 6.7x forward P/E. Read our free research report to see why you should think twice about including INGM in your portfolio.
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 9 Market-Beating Stocks. 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
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.