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. Keeping that in mind, here are three profitable companies to avoid and some better opportunities instead.
Ameresco (AMRC)
Trailing 12-Month GAAP Operating Margin: 6.7%
Having played a role in upgrading the energy solutions of Alcatraz Island, Ameresco (NYSE:AMRC) provides energy and renewable energy solutions for various sectors.
Why Are We Cautious About AMRC?
- Earnings per share fell by 15.7% annually over the last five years while its revenue grew, partly because it diluted shareholders
- Cash burn makes us question whether it can achieve sustainable long-term growth
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
At $27.78 per share, Ameresco trades at 18.4x forward P/E. Dive into our free research report to see why there are better opportunities than AMRC.
Thermo Fisher (TMO)
Trailing 12-Month GAAP Operating Margin: 17.6%
With over 14,000 sales personnel and a portfolio spanning more than 2,500 technology manufacturers, Thermo Fisher Scientific (NYSE:TMO) provides scientific equipment, reagents, consumables, software, and laboratory services to pharmaceutical, biotech, academic, and healthcare customers worldwide.
Why Are We Wary of TMO?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Efficiency has decreased over the last five years as its adjusted operating margin fell by 5.1 percentage points
- Earnings per share fell by 1.4% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
Thermo Fisher is trading at $598.07 per share, or 23x forward P/E. To fully understand why you should be careful with TMO, check out our full research report (it’s free).
Howard Hughes Holdings (HHH)
Trailing 12-Month GAAP Operating Margin: 24.9%
Named after the eccentric business magnate and aviator whose legacy lives on in real estate development, Howard Hughes Holdings (NYSE:HHH) develops, owns, and manages master-planned communities and commercial properties across the United States.
Why Is HHH Risky?
- Sales trends were unexciting over the last five years as its 25.2% annual growth was below the typical consumer discretionary company
- ROIC of 4.5% reflects management’s challenges in identifying attractive investment opportunities
- Returns on capital are growing as management invests in more worthwhile ventures
Howard Hughes Holdings’s stock price of $67.02 implies a valuation ratio of 1.7x trailing 12-month price-to-sales. Read our free research report to see why you should think twice about including HHH in your portfolio.
Stocks We Like More
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.