1 Profitable Stock for Long-Term Investors and 2 Facing Headwinds

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.

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 leverages its financial strength to beat the competition and two that may struggle to keep up.

Two Stocks to Sell:

Dollar General (DG)

Trailing 12-Month GAAP Operating Margin: 5.2%

Appealing to the budget-conscious consumer, Dollar General (NYSE:DG) is a discount retailer that sells a wide range of household essentials, groceries, apparel/beauty products, and seasonal merchandise.

Why Are We Hesitant About DG?

1. Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 4.1% for the last three years
2. Widely-available products (and therefore stiff competition) result in an inferior gross margin of 30.2% that must be offset through higher volumes
3. Falling earnings per share over the last three years has some investors worried as stock prices ultimately follow EPS over the long term

Dollar General’s stock price of $116.46 implies a valuation ratio of 16.1x forward P/E. Check out our free in-depth research report to learn more about why DG doesn’t pass our bar.

Zebra (ZBRA)

Trailing 12-Month GAAP Operating Margin: 13%

Taking its name from the black and white stripes of barcodes, Zebra Technologies (NASDAQ:ZBRA) provides barcode scanners, mobile computers, RFID systems, and other data capture technologies that help businesses track assets and optimize operations.

Why Does ZBRA Fall Short?

1. Muted 3.9% annual revenue growth over the last five years shows its demand lagged behind its business services peers
2. Earnings per share lagged its peers over the last five years as they only grew by 4.3% annually
3. Diminishing returns on capital suggest its earlier profit pools are drying up

At $229.76 per share, Zebra trades at 12.8x forward P/E. Read our free research report to see why you should think twice about including ZBRA in your portfolio.

One Stock to Watch:

Teledyne (TDY)

Trailing 12-Month GAAP Operating Margin: 19%

Playing a role in mapping the ocean floor as we know it today, Teledyne (NYSE:TDY) offers digital imaging and instrumentation products for various industries.

Why Do We Like TDY?

1. Annual revenue growth of 14.9% over the last five years was superb and indicates its market share increased during this cycle
2. Operating margin expanded by 5.1 percentage points over the last five years as it scaled and became more efficient
3. Free cash flow margin jumped by 9.6 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends

Teledyne is trading at $644.07 per share, or 25.8x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.

Stocks We Like Even More

ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.

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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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.