Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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. That said, here is one profitable company that generates reliable profits without sacrificing growth and two that may face some trouble.
Two Stocks to Sell:
Alarm.com (ALRM)
Trailing 12-Month GAAP Operating Margin: 13.1%
Processing over 325 billion data points annually from more than 150 million connected devices, Alarm.com (NASDAQ:ALRM) provides cloud-based platforms that enable residential and commercial property owners to remotely monitor and control their security, video, energy, and other connected devices.
Why Should You Sell ALRM?
- Customers had second thoughts about committing to its platform over the last year as its average billings growth of 7% underwhelmed
- Estimated sales growth of 3.7% for the next 12 months implies demand will slow from its two-year trend
- Operating margin expanded by 1.9 percentage points over the last year as it scaled and became more efficient
Alarm.com is trading at $46.47 per share, or 2.6x forward price-to-sales. Dive into our free research report to see why there are better opportunities than ALRM.
The Hanover Insurance Group (THG)
Trailing 12-Month GAAP Operating Margin: 14.1%
Founded in 1852 during a time when fire insurance was crucial for protecting businesses and homes, The Hanover Insurance Group (NYSE:THG) provides property and casualty insurance products through independent agents, serving individuals, small businesses, and mid-sized companies.
Why Are We Hesitant About THG?
- Muted 5% annual revenue growth over the last two years shows its demand lagged behind its insurance peers
- Sluggish 4.3% annualized growth in net premiums earned over the last two years indicates the firm trailed its insurance peers
- Muted 2.8% annual book value per share growth over the last five years shows its capital generation lagged behind its insurance peers
At $178.07 per share, The Hanover Insurance Group trades at 1.6x forward P/B. If you’re considering THG for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Vertiv (VRT)
Trailing 12-Month GAAP Operating Margin: 17.6%
Formerly part of Emerson Electric, Vertiv (NYSE:VRT) manufactures and services infrastructure technology products for data centers and communication networks.
Why Are We Bullish on VRT?
- Average organic revenue growth of 21% over the past two years demonstrates its ability to expand independently without relying on acquisitions
- Free cash flow margin increased by 7.9 percentage points over the last five years, giving the company more capital to invest or return to shareholders
- Returns on capital are climbing as management makes more lucrative bets
Vertiv’s stock price of $172.11 implies a valuation ratio of 36x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.