1 Profitable Stock on Our Watchlist and 2 That Underwhelm

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 is one profitable company that leverages its financial strength to beat the competition and two best left off your watchlist.

Two Stocks to Sell:

Karat Packaging (KRT)

Trailing 12-Month GAAP Operating Margin: 8.6%

Founded as Lollicup, Karat Packaging (NASDAQ: KRT) distributes and manufactures environmentally-friendly disposable foodservice packaging solutions.

Why Are We Cautious About KRT?

1. Earnings per share have contracted by 5.2% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance

Karat Packaging’s stock price of $26.17 implies a valuation ratio of 1.1x trailing 12-month price-to-sales. To fully understand why you should be careful with KRT, check out our full research report (it’s free).

Landstar (LSTR)

Trailing 12-Month GAAP Operating Margin: 3.5%

Covering billions of miles throughout North America, Landstar (NASDAQ:LSTR) is a transportation company specializing in freight and last-mile delivery services.

Why Is LSTR Risky?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 2.8% annually over the last two years
2. Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 8.1% annually
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

At $206.74 per share, Landstar trades at 34.3x forward P/E. Check out our free in-depth research report to learn more about why LSTR doesn’t pass our bar.

One Stock to Watch:

Burlington (BURL)

Trailing 12-Month GAAP Operating Margin: 7.4%

Founded in 1972 as a discount coat and outerwear retailer, Burlington Stores (NYSE:BURL) is now an off-price retailer that has broadened into general apparel, footwear, and home goods.

Why Do We Like BURL?

1. Rapid rollout of new stores to capitalize on market opportunities makes sense given its strong same-store sales performance
2. Locations open for at least a year are seeing increased demand as same-store sales have averaged 3.5% growth over the past two years
3. Free cash flow margin increased by 6.4 percentage points over the last year, giving the company more capital to invest or return to shareholders

Burlington is trading at $322.87 per share, or 24.9x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.

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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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.