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.
Not all profitable companies are created equal, and that’s why we built StockStory - to help you find the ones that truly shine bright. Keeping that in mind, here are three profitable companies to avoid and some better opportunities instead.
Qorvo (QRVO)
Trailing 12-Month GAAP Operating Margin: 7.3%
Formed by the merger of TriQuint and RF Micro Devices, Qorvo (NASDAQ: QRVO) is a designer and manufacturer of RF chips used in almost all smartphones globally, along with a variety of chips used in networking equipment and infrastructure.
Why Do We Pass on QRVO?
- Sales stagnated over the last five years and signal the need for new growth strategies
- Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 20.3 percentage points
- 11.1 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
Qorvo is trading at $87.10 per share, or 13.5x forward P/E. To fully understand why you should be careful with QRVO, check out our full research report (it’s free for active Edge members).
Verizon (VZ)
Trailing 12-Month GAAP Operating Margin: 23%
Formed in 1984 as Bell Atlantic after the breakup of Bell System into seven companies, Verizon (NYSE: VZ) is a telecom giant providing a range of communications and internet services.
Why Do We Avoid VZ?
- Underwhelming customer growth over the past two years shows the company faced challenges in winning new contracts
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 1.6%
- Incremental sales over the last five years were less profitable as its earnings per share were flat while its revenue grew
At $39.82 per share, Verizon trades at 8.4x forward P/E. Check out our free in-depth research report to learn more about why VZ doesn’t pass our bar.
SS&C (SSNC)
Trailing 12-Month GAAP Operating Margin: 23.2%
Founded in 1986 as a bridge between technology and financial services, SS&C Technologies (NASDAQ: SSNC) provides software and software-enabled services that help financial firms and healthcare organizations automate complex business processes.
Why Does SSNC Worry Us?
- Efficiency has decreased over the last five years as its adjusted operating margin fell by 1.3 percentage points
- Free cash flow margin shrank by 4.1 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Low returns on capital reflect management’s struggle to allocate funds effectively
SS&C’s stock price of $84.38 implies a valuation ratio of 12.9x forward P/E. Dive into our free research report to see why there are better opportunities than SSNC.
High-Quality Stocks for All Market Conditions
Fresh US-China trade tensions just tanked stocks—but strong bank earnings are fueling a sharp rebound. Don’t miss the bounce.
Don’t let fear keep you from great opportunities and take a look at 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 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% 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.
