While profitability is essential, it doesn’t guarantee long-term success. Some companies that rest on their margins will lose ground as competition intensifies - as Jeff Bezos said, "Your margin is my opportunity".
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 is one profitable company that balances growth and profitability and two that may face some trouble.
Two Stocks to Sell:
Shutterstock (SSTK)
Trailing 12-Month GAAP Operating Margin: 7.5%
Originally featuring a library that included many of founder Jon Oringer’s photos, Shutterstock (NYSE: SSTK) is now a digital platform where customers can license and use hundreds of millions of pieces of content.
Why Does SSTK Give Us Pause?
- Customer spending has dipped by 5.4% on average as it focused on growing its requests
- Estimated sales growth of 1.6% for the next 12 months implies demand will slow from its three-year trend
- Free cash flow margin shrank by 16.5 percentage points over the last few years, suggesting the company is consuming more capital to stay competitive
At $20.68 per share, Shutterstock trades at 3.8x forward EV/EBITDA. Read our free research report to see why you should think twice about including SSTK in your portfolio.
Orion (ORN)
Trailing 12-Month GAAP Operating Margin: 2.2%
Established in 1994, Orion (NYSE: ORN) provides construction services for marine infrastructure and industrial projects.
Why Is ORN Risky?
- Backlog has dropped by 1.7% on average over the past two years, suggesting it’s losing orders as competition picks up
- Gross margin of 9.3% is below its competitors, leaving less money to invest in areas like marketing and R&D
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
Orion is trading at $8.32 per share, or 35.1x forward P/E. If you’re considering ORN for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
Coupang (CPNG)
Trailing 12-Month GAAP Operating Margin: 2.2%
Founded in 2010 by Harvard Business School student Bom Kim, Coupang (NYSE: CPNG) is an e-commerce giant often referred to as the "Amazon of South Korea".
Why Could CPNG Be a Winner?
- Active Customers have grown by 11.8% annually, allowing for more profitable cross-selling opportunities if it can build complementary products and features
- Additional sales over the last three years increased its profitability as the 32% annual growth in its earnings per share outpaced its revenue
- Free cash flow margin jumped by 8 percentage points over the last few years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Coupang’s stock price of $32.10 implies a valuation ratio of 29.4x forward EV/EBITDA. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
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