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.
A business making money today isn’t necessarily a winner, which is why we analyze companies across multiple dimensions at StockStory. That said, here are three profitable companies to avoid and some better opportunities instead.
Akamai Technologies (AKAM)
Trailing 12-Month GAAP Operating Margin: 15%
With a massive distributed network spanning 4,100+ points of presence in nearly 130 countries, Akamai Technologies (NASDAQ: AKAM) provides a global distributed cloud platform that helps businesses deliver, secure, and optimize their digital experiences online.
Why Should You Dump AKAM?
- Sales trends were unexciting over the last two years as its 5.1% annual growth was well below the typical software company
- Bad unit economics and steep infrastructure costs are reflected in its gross margin of 59.1%, one of the worst among software companies
- Long payback periods on sales and marketing expenses limit customer growth and signal the company operates in a highly competitive environment
Akamai Technologies’s stock price of $96.93 implies a valuation ratio of 3.3x forward price-to-sales. If you’re considering AKAM for your portfolio, see our FREE research report to learn more.
Power Integrations (POWI)
Trailing 12-Month GAAP Operating Margin: 1.2%
A leading supplier of parts for electronics such as home appliances, Power Integrations (NASDAQ: POWI) is a semiconductor designer and developer specializing in products used for high-voltage power conversion.
Why Do We Steer Clear of POWI?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last five years
- Anticipated sales growth of 1.9% for the next year implies demand will be shaky
- Expenses have increased as a percentage of revenue over the last five years as its operating margin fell by 22.1 percentage points
At $45.89 per share, Power Integrations trades at 42.3x forward P/E. To fully understand why you should be careful with POWI, check out our full research report (it’s free).
Sysco (SYY)
Trailing 12-Month GAAP Operating Margin: 3.7%
Powering more than 730,000 commercial kitchens across North America and Europe, Sysco (NYSE: SYY) is a global food distributor that supplies restaurants, healthcare facilities, schools, hotels, and other foodservice establishments with food products and related services.
Why Is SYY Risky?
- Products are seeing elevated demand as its unit sales averaged 0.9% growth over the past two years
- Free cash flow margin is expected to remain in place over the coming year
- Returns on capital haven’t budged, indicating management couldn’t drive additional value creation
Sysco is trading at $83.51 per share, or 17.7x forward P/E. Check out our free in-depth research report to learn more about why SYY doesn’t pass our bar.
Stocks We Like More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our 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 244% over the last five years (as of June 30, 2025).
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.
