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".

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 three profitable companies to steer clear of and a few better alternatives.

General Motors (GM)

Trailing 12-Month GAAP Operating Margin: 5.7%

Founded in 1908 by William C. Durant, General Motors (NYSE: GM) offers a range of vehicles and automobiles through brands such as Chevrolet, Buick, GMC, and Cadillac.

Why Are We Cautious About GM?

1. Underwhelming unit sales over the past two years indicate demand is soft and that the company may need to revise its strategy
2. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 7.9 percentage points
3. 5× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly

At $57.75 per share, General Motors trades at 6.2x forward P/E. Read our free research report to see why you should think twice about including GM in your portfolio.

Albany (AIN)

Trailing 12-Month GAAP Operating Margin: 8.4%

Founded in 1895, Albany (NYSE: AIN) is a global textiles and materials processing company, specializing in machine clothing for paper mills and engineered composite structures for aerospace and other industries.

Why Should You Dump AIN?

1. 3.7% annual revenue growth over the last five years was slower than its industrials peers
2. Incremental sales over the last five years were much less profitable as its earnings per share fell by 7.7% annually while its revenue grew
3. Free cash flow margin shrank by 8.5 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive

Albany is trading at $56.70 per share, or 17.2x forward P/E. If you’re considering AIN for your portfolio, see our FREE research report to learn more.

HP (HPQ)

Trailing 12-Month GAAP Operating Margin: 5.9%

Born from the legendary Silicon Valley garage startup founded by Bill Hewlett and Dave Packard in 1939, HP (NYSE: HPQ) designs and sells personal computers, printers, and related technology products and services to consumers, businesses, and enterprises worldwide.

Why Do We Avoid HPQ?

1. Sales were flat over the last five years, indicating it’s failed to expand this cycle
2. Projected sales growth of 2% for the next 12 months suggests sluggish demand
3. Sales over the last two years were less profitable as its earnings per share fell by 2% annually while its revenue was flat

HP’s stock price of $27.09 implies a valuation ratio of 8.2x forward P/E. Check out our free in-depth research report to learn more about why HPQ doesn’t pass our bar.

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 6 Stocks for this week. 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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