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.

A business making money today isn’t necessarily a winner, which is why we analyze companies across multiple dimensions at StockStory. Keeping that in mind, here are three profitable companies that don’t make the cut and some better opportunities instead.

Lovesac (LOVE)

Trailing 12-Month GAAP Operating Margin: 1.2%

Known for its oversized, premium beanbags, Lovesac (NASDAQ: LOVE) is a specialty furniture brand selling modular furniture.

Why Do We Think LOVE Will Underperform?

1. 19.5% annual revenue growth over the last five years was slower than its consumer discretionary peers
2. Poor free cash flow margin of 1.1% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

Lovesac is trading at $13.81 per share, or 5.3x forward EV-to-EBITDA. To fully understand why you should be careful with LOVE, check out our full research report (it’s free for active Edge members).

MSC Industrial (MSM)

Trailing 12-Month GAAP Operating Margin: 8%

Founded in NYC’s Little Italy, MSC Industrial Direct (NYSE: MSM) provides industrial supplies and equipment, offering vast and reliable selection for customers such as contractors

Why Should You Sell MSM?

1. Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
2. Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

At $86.76 per share, MSC Industrial trades at 20.3x forward P/E. If you’re considering MSM for your portfolio, see our FREE research report to learn more.

Silgan Holdings (SLGN)

Trailing 12-Month GAAP Operating Margin: 9.2%

Established in 1987, Silgan Holdings (NYSE: SLGN) is a supplier of rigid packaging for consumer goods products, specializing in metal containers, closures, and plastic packaging.

Why Should You Dump SLGN?

1. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
2. High input costs result in an inferior gross margin of 16.8% that must be offset through higher volumes
3. Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital

Silgan Holdings’s stock price of $40.05 implies a valuation ratio of 10.5x forward P/E. Read our free research report to see why you should think twice about including SLGN in your portfolio.

Stocks We Like More

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Growth Stocks for this month. 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.