While profitability is essential, it doesn’t guarantee long-term success. Some companies that rest on their margins will lose ground as competition intensifies - as Jeff Bezos said, "Your margin is my opportunity".
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 steer clear of and a few better alternatives.
Lucky Strike (LUCK)
Trailing 12-Month GAAP Operating Margin: 7.4%
Born from the transformation of traditional bowling alleys into modern entertainment destinations, Lucky Strike (NYSE:LUCK) operates bowling alleys and other entertainment venues with upscale amenities, arcade games, and food and beverage services across North America.
Why Do We Pass on LUCK?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and in-store experience
- Waning returns on capital imply its previous profit engines are losing steam
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
At $10.10 per share, Lucky Strike trades at 33.8x forward P/E. Read our free research report to see why you should think twice about including LUCK in your portfolio.
UFP Industries (UFPI)
Trailing 12-Month GAAP Operating Margin: 6.3%
Beginning as a lumber supplier in the 1950s, UFP Industries (NASDAQ:UFPI) is a holding company making building materials for the construction, retail, and industrial sectors.
Why Are We Hesitant About UFPI?
- Declining unit sales over the past two years suggest it might have to lower prices to accelerate growth
- Earnings per share have dipped by 20.4% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Diminishing returns on capital suggest its earlier profit pools are drying up
UFP Industries is trading at $101.41 per share, or 15.7x forward P/E. To fully understand why you should be careful with UFPI, check out our full research report (it’s free).
TTM Technologies (TTMI)
Trailing 12-Month GAAP Operating Margin: 6.5%
As one of the world's largest printed circuit board manufacturers with facilities spanning North America and Asia, TTM Technologies (NASDAQ:TTMI) manufactures printed circuit boards (PCBs) and radio frequency (RF) components for aerospace, defense, automotive, and telecommunications industries.
Why Are We Wary of TTMI?
- Muted 4.4% annual revenue growth over the last five years shows its demand lagged behind its business services peers
- 6.1 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
- Underwhelming 5% return on capital reflects management’s difficulties in finding profitable growth opportunities
TTM Technologies’s stock price of $41.86 implies a valuation ratio of 18.7x forward P/E. If you’re considering TTMI for your portfolio, see our FREE research report to learn more.
Stocks We Like More
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
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-micro-cap company Tecnoglass (+1,754% 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
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