Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.

Not all profitable companies are created equal, and that’s why we built StockStory - to help you find the ones that truly shine bright. That said, here are three profitable companies to avoid and some better opportunities instead.

Tractor Supply (TSCO)

Trailing 12-Month GAAP Operating Margin: 9.7%

Started as a mail-order tractor parts business, Tractor Supply (NASDAQ: TSCO) is a retailer of general goods such as agricultural supplies, hardware, and pet food for the rural consumer.

Why Does TSCO Worry Us?

1. Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 4.4% over the last three years was below our standards for the consumer retail sector
2. Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
3. Commoditized inventory, bad unit economics, and high competition are reflected in its low gross margin of 36.4%

At $52.38 per share, Tractor Supply trades at 23.6x forward P/E. Read our free research report to see why you should think twice about including TSCO in your portfolio.

Integral Ad Science (IAS)

Trailing 12-Month GAAP Operating Margin: 11.1%

Processing over 280 billion digital ad interactions daily through its AI-powered technology, Integral Ad Science (NASDAQ: IAS) provides a cloud-based platform that measures and verifies digital advertising across devices, channels, and formats to ensure ads are viewable, fraud-free, and brand-safe.

Why Does IAS Give Us Pause?

1. 13.6% annual revenue growth over the last two years was slower than its software peers
2. Operating margin expanded by 1 percentage points over the last year as it scaled and became more efficient
3. Capital intensity will likely increase as its free cash flow margin is anticipated to drop by 10.9 percentage points over the next year

Integral Ad Science is trading at $10.26 per share, or 2.6x forward price-to-sales. Check out our free in-depth research report to learn more about why IAS doesn’t pass our bar.

Avnet (AVT)

Trailing 12-Month GAAP Operating Margin: 2.8%

With a century-long history of adapting to technological evolution, Avnet (NASDAQ: AVT) is a global electronic components distributor that connects manufacturers of semiconductors and other electronic parts with businesses that need these components.

Why Are We Cautious About AVT?

1. Sales tumbled by 7.2% annually over the last two years, showing market trends are working against its favor during this cycle
2. Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
3. Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital

Avnet’s stock price of $48.59 implies a valuation ratio of 9.9x forward P/E. If you’re considering AVT for your portfolio, see our FREE research report to learn more.

Stocks We Like More

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here in our Top 5 Strong Momentum Stocks for this week. 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 Kadant (+351% 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.