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2 Lucrative Stocks with Promising Growth and 1 We Steer Clear Of

2 Lucrative Stocks with Promising Growth and 1 We Steer Clear Of

101 finance101 finance2026/02/27 10:39
By:101 finance

Profitable Companies: Not All Are Built for the Future

Some businesses may be generating profits now, but that doesn't guarantee long-term success. Many rely on outdated strategies or temporary advantages. At StockStory, we look beyond current earnings to evaluate companies from multiple perspectives. Below, we highlight two companies with consistent profitability and growth, as well as one that may face challenges ahead.

Stock to Consider Selling

Academy Sports (ASO)

Trailing 12-Month GAAP Operating Margin: 8.3%

Academy Sports & Outdoor (NASDAQ:ASO) began as a tire shop in 1938 and later expanded into fishing gear. Today, it offers a wide range of sporting goods, but remains best known for its outdoor merchandise.

Concerns with ASO:

  • Over the past three years, annual sales have declined by 2.4%, indicating shifting consumer preferences are impacting the business.
  • Same-store sales have disappointed for two consecutive years, suggesting customers are not engaging with the current product mix or in-store experience.
  • Capital requirements have increased recently, as evidenced by a 3.9 percentage point drop in free cash flow margin.

With shares trading at $61.12 and a forward P/E of 9.6x, ASO may not offer the best value.

Stocks Worth Watching

Vita Coco (COCO)

Trailing 12-Month GAAP Operating Margin: 13.5%

Launched in 2004 and going public in 2021, The Vita Coco Company (NASDAQ:COCO) specializes in coconut water, offering a natural hydration solution.

Why COCO Stands Out:

  • Unit sales have surged by 9.9% over the past two years, reflecting strong consumer demand.
  • Earnings per share have soared by an average of 70.9% annually over the last three years, far outpacing industry peers.
  • A return on invested capital (ROIC) of 36.9% demonstrates management’s ability to make profitable investments, with returns continuing to climb.

Currently priced at $53.72 per share with a forward P/E of 34.2x, is now the time to invest?

NMI Holdings (NMIH)

Trailing 12-Month GAAP Operating Margin: 74.8%

Established after the 2008 financial crisis, NMI Holdings (NASDAQ:NMIH) was created to expand capacity in the mortgage insurance sector, protecting lenders from losses when borrowers default on home loans.

What Makes NMIH Attractive:

  • Pre-tax profit margin has grown by 20.4 percentage points over the past five years, reflecting improved scale and efficiency.
  • Book value per share has increased by 16.1% annually over the last five years, highlighting enhanced capital strength.
  • A leading 17.4% return on equity showcases management’s expertise in securing high-return investments.

NMI Holdings is currently valued at $39.75 per share, or 1x forward price-to-book. Is this the right moment to buy?

Our Top Stock Picks

Relying on just a handful of stocks can leave your portfolio vulnerable. Now is the time to secure high-quality investments before the market shifts and these opportunities vanish.

Don’t wait for the next market downturn. Discover our Top 5 Strong Momentum Stocks for this week. This exclusive list features high-quality stocks that have delivered a remarkable 244% return over the past five years (as of June 30, 2025).

Our 2020 selections included well-known names like Nvidia, which soared 1,326% from June 2020 to June 2025, as well as lesser-known companies such as Comfort Systems, which achieved a 782% five-year return. Start your search for the next breakout stock with StockStory today.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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