Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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 two profitable companies that generate reliable profits without sacrificing growth and one best left off your watchlist.

One Stock to Sell:

Kimberly-Clark (KMB)

Trailing 12-Month GAAP Operating Margin: 14.3%

Originally founded as a Wisconsin paper mill in 1872, Kimberly-Clark (NYSE: KMB) is now a household products powerhouse known for personal care and tissue products.

Why Are We Cautious About KMB?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
2. Estimated sales growth of 2.1% for the next 12 months is soft and implies weaker demand
3. Capital intensity has ramped up over the last year as its free cash flow margin decreased by 5 percentage points

At $100.92 per share, Kimberly-Clark trades at 13.2x forward P/E. To fully understand why you should be careful with KMB, check out our full research report (it’s free).

Two Stocks to Buy:

Copart (CPRT)

Trailing 12-Month GAAP Operating Margin: 36.5%

Starting as a single salvage yard in California in 1982, Copart (NASDAQ: CPRT) operates an online auction platform that connects sellers of damaged and salvage vehicles with buyers ranging from dismantlers and rebuilders to used car dealers and exporters.

Why Are We Backing CPRT?

1. Market share has increased this cycle as its 15.1% annual revenue growth over the last five years was exceptional
2. Performance over the past five years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 17.5% outpaced its revenue gains
3. Strong free cash flow margin of 23.9% enables it to reinvest or return capital consistently, and its improved cash conversion implies it’s becoming a less capital-intensive business

Copart is trading at $34.32 per share, or 21.3x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.

Arlo Technologies (ARLO)

Trailing 12-Month GAAP Operating Margin: 1.1%

Originally spun off from networking equipment maker Netgear in 2018, Arlo Technologies (NYSE: ARLO) provides cloud-based smart security devices and subscription services that help consumers and businesses monitor and protect their homes, properties, and loved ones.

Why Is ARLO a Good Business?

1. Solid 8.2% annual revenue growth over the last five years indicates its offering’s solve complex business issues
2. Incremental sales significantly boosted profitability as its annual earnings per share growth of 61% over the last two years outstripped its revenue performance
3. Free cash flow margin jumped by 18.5 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends

Arlo Technologies’s stock price of $14.14 implies a valuation ratio of 17.5x 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

ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum — both boxes checked at the same time.

Find out which stocks our AI platform is flagging this week. See this week's Strong Momentum stocks — FREE. Get Our Strong Momentum 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.