Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.
A stock with low volatility can be reassuring, but it doesn’t always mean strong long-term performance.
Investors who prioritize stability may miss out on higher-reward opportunities elsewhere.
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".
The stocks in this article are all trading near their 52-week highs.
This strength often reflects positive developments such as new product launches, favorable industry trends, or improved financial performance.
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.
Companies with more cash than debt can be financially resilient, but that doesn’t mean they’re all strong investments.
Some lack leverage because they struggle to grow or generate consistent profits, making them unattractive borrowers.
Even if they go mostly unnoticed, industrial businesses are the backbone of our country. But their prominence also brings high exposure to the ups and downs of economic cycles.
Luckily, the tide is turning in their favor as the industry’s 39.5% return over the past six months has topped the S&P 500 by 14 percentage points.
Industrials businesses quietly power the physical things we depend on, from cars and homes to e-commerce infrastructure. Their momentum is also rising as lower interest rates have incentivized higher capital spending.
As a result, the industry has posted a 39.5% gain over the past six months, beating the S&P 500 by 14 percentage points.
A company that generates cash isn’t automatically a winner.
Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
Many small-cap stocks have limited Wall Street coverage, giving savvy investors the chance to act before everyone else catches on.
But the flip side is that these businesses have increased downside risk because they lack the scale and staying power of their larger competitors.
Value investing has created more billionaires than any other strategy, like Warren Buffett, who built his fortune by purchasing wonderful businesses at reasonable prices.
But these hidden gems are few and far between - many stocks that appear cheap often stay that way because they face structural issues.
While strong cash flow is a key indicator of stability, it doesn’t always translate to superior returns.
Some cash-heavy businesses struggle with inefficient spending, slowing demand, or weak competitive positioning.
Expensive stocks often command premium valuations because the market thinks their business models are exceptional.
However, the downside is that high expectations are already baked into their prices, leaving little room for error if they stumble even slightly.
The S&P 500 (^GSPC) is home to the biggest and most well-known companies in the market, making it a go-to index for investors seeking stability.
But not all large-cap stocks are created equal - some are struggling with slowing growth, declining margins, or increased competition.
Wall Street has issued downbeat forecasts for the stocks in this article.
These predictions are rare - financial institutions typically hesitate to say bad things about a company because it can jeopardize their other revenue-generating business lines like M&A advisory.
Rapid spending isn’t always a sign of progress.
Some cash-burning businesses fail to convert investments into meaningful competitive advantages, leaving them vulnerable.
Mid-cap stocks often strike the right balance between having proven business models and market opportunities that can support $100 billion corporations.
However, they face intense competition from scaled industry giants and can be disrupted by new innovative players vying for a slice of the pie.
The Russell 2000 (^RUT) is packed with potential breakout stocks, thanks to its focus on smaller companies with high growth potential.
However, smaller size also means these businesses often lack the resilience and financial flexibility of large-cap firms, making careful selection crucial.
Growth is oxygen.
But when it evaporates, the consequences can be severe - ask anyone who bought Cisco in the Dot-Com Bubble or newer investors who lived through the 2020 to 2022 COVID cycle.
Growth boosts valuation multiples, but it doesn’t always last forever.
Companies that cannot maintain it are often penalized with large declines in market value, a lesson ingrained in investors who lost money in tech stocks during 2022.
Broader markets were mixed in early trade, with smallcaps outperforming even as IT and media stocks remained under pressure, while autos and FMCG lent support.
Small-cap stocks in the Russell 2000 (^RUT) can be a goldmine for investors looking beyond the usual large-cap names.
But with less stability and fewer resources than their bigger counterparts, these companies face steeper challenges in scaling their businesses.
Stocks under $10 pique our interest because they have room to grow (as well as the most affordable option contract premiums).
That doesn’t mean they’re bargains though, and we urge investors to be careful as many have risky business models.
PepsiCo is trading well above its estimated intrinsic value of ~$58, suggesting a limited margin of safety — the analysis favors viewing it more as a reliable compounder than a deep value buy.
Encore Capital Group’s 33.1% return over the past six months has outpaced the S&P 500 by 7.6%, and its stock price has climbed to $40.47 per share. This was partly thanks to its solid quarterly results, and the performance may have investors wondering how to approach the situation.
Skyworks Solutions trades at $73 and has moved in lockstep with the market. Its shares have returned 30.4% over the last six months while the S&P 500 has gained 25.5%.
What a time it’s been for Sterling. In the past six months alone, the company’s stock price has increased by a massive 157%, reaching $359.80 per share. This was partly thanks to its solid quarterly results, and the run-up might have investors contemplating their next move.
Over the past six months, Wabash’s stock price fell to $8.90. Shareholders have lost 12.6% of their capital, which is disappointing considering the S&P 500 has climbed by 25.5%. This may have investors wondering how to approach the situation.
Over the last six months, F&G Annuities & Life’s shares have sunk to $29.58, producing a disappointing 15% loss - a stark contrast to the S&P 500’s 25.5% gain. This might have investors contemplating their next move.
Over the last six months, Saia’s shares have sunk to $302.50, producing a disappointing 9.6% loss - a stark contrast to the S&P 500’s 25.5% gain. This may have investors wondering how to approach the situation.
HCI Group trades at $190.34 and has moved in lockstep with the market. Its shares have returned 30.3% over the last six months while the S&P 500 has gained 25.5%.
What a fantastic six months it’s been for Hillenbrand. Shares of the company have skyrocketed 52.1%, hitting $31.31. This was partly thanks to its solid quarterly results, and the run-up might have investors contemplating their next move.
Take-Two trades at $257.07 per share and has stayed right on track with the overall market, gaining 20.8% over the last six months. At the same time, the S&P 500 has returned 25.5%.
HCA Healthcare has followed the market’s trajectory closely, rising in tandem with the S&P 500 over the past six months. The stock has climbed by 25.2% to $419.60 per share while the index has gained 25.5%.
First Bancorp trades at $46.32 per share and has stayed right on track with the overall market, gaining 24.8% over the last six months. At the same time, the S&P 500 has returned 25.5%.
Over the past six months, Electronic Arts has been a great trade, beating the S&P 500 by 12%. Its stock price has climbed to $200.22, representing a healthy 37.5% increase. This run-up might have investors contemplating their next move.
Trump may potentially announce new measures to expand access to in-vitro fertilization, including guidance for employers to offer supplemental fertility insurance and steep discounts on key IVF drugs.
The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how digital media & content platforms stocks fared in Q2, starting with Getty Images (NYSE:GETY).
Earnings results often indicate what direction a company will take in the months ahead. With Q2 behind us, let’s have a look at Karat Packaging (NASDAQ:KRT) and its peers.
The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Clean Harbors (NYSE:CLH) and the rest of the waste management stocks fared in Q2.
