3 Profitable Stocks We Find Risky

Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.

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.

Pegasystems (PEGA)

Trailing 12-Month GAAP Operating Margin: 15.1%

With a "Center-out Business Architecture" approach that transcends organizational silos, Pegasystems (NASDAQ:PEGA) develops software that helps organizations automate workflows and use artificial intelligence to improve customer experiences and business processes.

Why Does PEGA Fall Short?

1. 11.4% annual revenue growth over the last five years was slower than its software peers
2. Long payback periods on sales and marketing expenses limit customer growth and signal the company operates in a highly competitive environment
3. Operating margin expanded by 6.8 percentage points over the last year as it scaled and became more efficient

Pegasystems’s stock price of $43.25 implies a valuation ratio of 4.1x forward price-to-sales. If you’re considering PEGA for your portfolio, see our FREE research report to learn more.

Live Nation (LYV)

Trailing 12-Month GAAP Operating Margin: 5%

Owner of Ticketmaster and operator of music festival EDC, Live Nation (NYSE:LYV) is a company specializing in live event promotion, venue management, and ticketing services for concerts and shows.

Why Are We Hesitant About LYV?

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 5.3% for the last two years
2. Operating margin of 4.3% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
3. Capital intensity will likely ramp up in the next year as its free cash flow margin is expected to contract by 1.3 percentage points

At $164.50 per share, Live Nation trades at 121.4x forward P/E. To fully understand why you should be careful with LYV, check out our full research report (it’s free).

Titan International (TWI)

Trailing 12-Month GAAP Operating Margin: 1.2%

Acquiring Goodyear’s farm tire business in 2005, Titan (NSYE:TWI) is a manufacturer and supplier of wheels, tires, and undercarriages used in off-highway vehicles such as construction vehicles.

Why Are We Out on TWI?

1. Sales stagnated over the last two years and signal the need for new growth strategies
2. Earnings per share fell by 46.7% annually over the last two years while its revenue was flat, showing each sale was less profitable
3. Eroding returns on capital suggest its historical profit centers are aging

Titan International is trading at $8.27 per share, or 185.8x forward P/E. Check out our free in-depth research report to learn more about why TWI doesn’t pass our bar.

Stocks We Like 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.

Find out which 5 stocks it's flagging for this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.

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.