3 Profitable Stocks Showing Warning Signs
Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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 are three profitable companies to steer clear of and a few better alternatives.
Trailing 12-Month GAAP Operating Margin: 18.4%
Based in Long Island City, Altice USA (NYSE:ATUS) is a telecommunications company offering cable, internet, telephone, and television services across the United States.
Why Do We Think ATUS Will Underperform?
Demand for its offerings was relatively low as its number of broadband subscribers has underwhelmed
Sales were less profitable over the last five years as its earnings per share fell by 27.4% annually, worse than its revenue declines
Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Altice's stock price of $2.32 implies a valuation ratio of 0.3x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than ATUS.
Trailing 12-Month GAAP Operating Margin: 30.5%
With almost 100% of its properties under franchise agreements, Choice Hotels (NYSE:CHH) is a hotel franchisor known for its diverse brand portfolio including Comfort Inn, Quality Inn, and Clarion.
Why Do We Avoid CHH?
Revenue per room has disappointed over the past two years due to weaker trends in its daily rates and occupancy levels
Demand is forecasted to shrink as its estimated sales for the next 12 months are flat
Waning returns on capital imply its previous profit engines are losing steam
At $126.92 per share, Choice Hotels trades at 18.1x forward P/E. If you're considering CHH for your portfolio, see our FREE research report to learn more.
Trailing 12-Month GAAP Operating Margin: 13.9%
With roots dating back to 1807 when Charles Wiley opened a small printing shop in Manhattan, John Wiley & Sons (NYSE:WLY) is a global academic publisher that provides scientific journals, books, digital courseware, and knowledge solutions for researchers, students, and professionals.
Why Should You Dump WLY?
Sales tumbled by 1.6% annually over the last five years, showing market trends are working against its favor during this cycle
Earnings per share were flat over the last two years and fell short of the peer group average
Free cash flow margin dropped by 4.3 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Wiley is trading at $39.30 per share, or 16.3x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including WLY in your portfolio, it's free.
Donald Trump's victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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 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.
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I have been to some very loud concerts. Nothing compares to what I witnessed at SoFi Stadium in Los Angeles on Aug. 9, 2023, when I attended Taylor Swift's Eras Tour. 'Here we are on the last night of the U.S. leg of the Eras Tour, in the eighth month of the year on the ninth day of the month,' Swift told the 70,000-plus people in the audience near the end of the 3½-hour show. '... There's something that I've been planning for a really, really, really, ridiculously, embarrassingly long time. And I think instead of just telling you about it, I think I'll just sort of show you.' The screaming during Swift's speech — her emphasis on the numbers eight and nine could only mean one thing — was just a warmup for the deafening roar when the enormous screen behind her transformed into the cover art for '1989 (Taylor's Version).' The surprise reveal of Swift's fourth rerecorded album, an effort she started in 2019 after her devastation that her master recordings of her first six albums were sold to music manager Scooter Braun, sent the crowd into such a frenzy that my ears still hurt when I think about it. That was the last rerecording announcement that Swift made until Friday morning, when the superstar dropped the bombshell that after the years-long battle, she finally was able to buy back her masters and now owns her entire music catalogue. The purchase, which Swift called her 'greatest dream come true,' immediately made global headlines, from every corner of social media to midday cable news. ('Now it's all going to be Taylor's version,' said CNBC reporter Bertha Coombs, to which anchor Kelly Evans replied, 'All is well with the world.') The most ecstatic people were in her fandom, the famously loyal Swifties who ensured that all of the 'Taylor's Version' albums ('Fearless' and 'Red' in 2021, 'Speak Now' and '1989' in 2023) debuted at No. 1 on the Billboard 200 chart. Swift embarked on this project to gain control of her music and as a way to devalue her original recordings so they wouldn't be worth as much to Braun, who Swift claimed bullied her for years. (In 2020, he sold her masters to private equity firm Shamrock Capital.) Until Friday, the most die-hard fans called those songs the 'stolen versions' and refused to listen to them, even if they preferred the originals to the updated tracks. Swift's announcement, however, also prompted some criticism on social media and beyond from people who looked back on the 'Taylor's Version' endeavor and called it a 'scam,' or mocked fans who spent money on the rerecords when Swift — whose net worth reached a reported $1.6 billion last year — turned around and bought back the masters anyway. Swift's statement implied that she won't be releasing the highly anticipated 'Reputation (Taylor's Version)' and that there's no timeline for her rerecorded self-titled debut album. There's no doubt that Swifties have had an extreme reaction to this project: the internet-consuming countdown to every rerelease day; the intense speculation about when Swift was dropping 'Rep TV,' including the widespread theory that she would reveal the date at last week's American Music Awards (nope); the literal tears of joy after Friday's announcement. But as I thought about it, I went back to that eardrum-piercing night in Los Angeles and what Swift said during her speech before she revealed the album, as she talked about how she was 'pleasantly surprised' by how much fans had supported her rerecording quest. 'That was something that I expected to be just a 'me' thing, just a personal thing,' Swift said. '... The way that you have embraced that, the way that you have celebrated that — you really decided that it was your fight too, and that you were 100 percent behind me. And if I cared about it, you cared about it. I will never stop thanking you for that.' Setting aside the idea that Swift could actually be surprised that her listeners cared about her actions (in 2014, iTunes Canada accidentally uploaded eight seconds of static labeled as a Taylor Swift song and it immediately rocketed to No. 1), her speech got to the core of why Swifties connected so deeply to the rerecords. The foundation of Swift's legacy as a once-in-a-generation pop star is the inimitable relationship she has with her fan base, building on the personal nature of her music that has enthralled listeners for nearly 20 years. Swift's back-and-forth with her fans dates back to her country music days as a teenager in Nashville, when she spent hours chatting on MySpace and stayed at venues until every autograph was signed. She bought listeners Christmas presents and showed up at their houses and left comments on their Instagram photos, and she jumped out of the car to meet them if she saw them wearing one of her tour T-shirts on the street. Swift has never charged for meet-and-greets at her concerts. She hosted backstage after-parties and had 'secret sessions' for early album previews at her home. She referred to her fans as friends, and emphasized that they are all equally important participants in her musical journey. But as Swift has become a global celebrity, the relationship with her fans had to change. Her fan base has grown at an astonishing and unmanageable rate, and for both logistical and safety reasons, Swift hasn't hosted meet-and-greets since 2018. Although she posts the occasional reaction on TikTok, she's rarely active on social media. When I interview Swifties, they often say that they understand why she had to pull back on letting everyday people into her life, but that they still wish they could talk to Taylor like they did in the old days. In a way, the rerecords allowed the less accessible Swift to communicate with her fans once again. She incentivized the purchase by including 'from the vault' songs that she left off the albums the first time, which provided new details for the Swifties who meticulously track her life story, and shed insight into how she thought about her career and legacy. On the rerecorded 'Fearless,' she paid homage to her country music roots as she tapped Keith Urban and Maren Morris to sing with her on two vault tracks. The new 'Red' included the 10-minute version of 'All Too Well,' with unreleased lyrics that fans had been clamoring for for almost a decade. With the 'Speak Now' rerelease looming, she assured one concert crowd that she didn't need anyone defending her online — presumably a preventative measure for people to leave John Mayer alone about 'Dear John,' the album's scathing ballad. The updated '1989' included vault songs with even more vulnerable lyrics about a breakup. All of her actions surrounding the rereleases, including the letters she included with each album that explained her choices in making the record, proved the most important thing for Swifties: that she was still listening to them. A few years ago, I wrote about how the hunt for hints and Easter eggs in Swift's work (something she has always encouraged) had exploded over time. One fan told me, 'She's aware of the game, so if we play the game, it feels like we're all doing something together.' That sums up why the practice only increased through the rerecords. During the Los Angeles announcement, for example, people in the stadium also lost their minds when Swift appeared onstage in a blue costume. Because '1989' is associated with the color blue, they (correctly) assumed a 'Taylor's Version' announcement was coming that night. This doesn't make sense to anyone outside the fan base, but that's the point. In her letter about her masters on Friday, Swift noted that the success of the Eras Tour (which grossed more than $2 billion) allowed her to make this purchase — but so did the support from her fans. And that underscores what Swift has told them all along and what the Swifties believe: that Taylor and the fans always have been, and always will be, in this together.
