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".

A business making money today isn’t necessarily a winner, which is why we analyze companies across multiple dimensions at StockStory. Keeping that in mind, here are three profitable companies to steer clear of and a few better alternatives.

Torrid (CURV)

Trailing 12-Month GAAP Operating Margin: 2.1%

Promoting a message of body positivity and inclusiveness, Torrid Holdings (NYSE: CURV) is a plus-size women’s apparel and accessories retailer.

Why Should You Dump CURV?

1. Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
2. Free cash flow margin dropped by 7.9 percentage points over the last year, implying the company became more capital intensive as competition picked up
3. Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders

Torrid is trading at $1.69 per share, or 8x forward EV-to-EBITDA. If you’re considering CURV for your portfolio, see our FREE research report to learn more.

Sanmina (SANM)

Trailing 12-Month GAAP Operating Margin: 4.5%

Founded in 1980, Sanmina (NASDAQ: SANM) is an electronics manufacturing services company offering end-to-end solutions for various industries.

Why Do We Think Twice About SANM?

1. Muted 5% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
2. Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 8.2%
3. Eroding returns on capital suggest its historical profit centers are aging

Sanmina’s stock price of $129.01 implies a valuation ratio of 13.2x forward P/E. Read our free research report to see why you should think twice about including SANM in your portfolio.

BD (BDX)

Trailing 12-Month GAAP Operating Margin: 12.2%

With a history dating back to 1897 and a presence in virtually every hospital around the globe, Becton Dickinson (NYSE: BDX) develops and manufactures medical supplies, devices, laboratory equipment and diagnostic products used by healthcare institutions and professionals worldwide.

Why Does BDX Worry Us?

1. Annual sales growth of 4.1% over the last five years lagged behind its healthcare peers as its large revenue base made it difficult to generate incremental demand
2. Forecasted revenue decline of 12% for the upcoming 12 months implies demand will fall off a cliff
3. ROIC of 4.3% reflects management’s challenges in identifying attractive investment opportunities

At $158.14 per share, BD trades at 12.3x forward P/E. To fully understand why you should be careful with BDX, check out our full research report (it’s free).

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