Avoid These Profitable Companies and Invest in Better Alternatives for a Durable Portfolio

While profits are a crucial indicator of a company's success, they're not the only factor to consider when making an investment. At StockStory, we help you identify companies with real staying power and steer clear of those that may struggle to maintain growth or face looming threats. Here are three profitable companies to avoid and some better alternatives.

Target (TGT)

Target serves the suburban consumer who is looking for a wide range of products under one roof. However, the company has struggled with poor same-store sales performance over the past two years and is expected to see flat revenue over the next 12 months. Additionally, its gross margin of 28% is below its competitors, leaving less money for marketing and promotions.

Alternative: Amazon (AMZN)

Amazon has consistently outperformed the market and has a strong focus on innovation and customer satisfaction. With its vast product selection and efficient logistics, Amazon is well-positioned to continue its growth trajectory.

Casella Waste Systems (CWST)

Casella offers waste management services for businesses, residents, and the government. However, the company's organic sales performance over the past two years indicates that it may need to make strategic adjustments or rely on M&A to catalyze faster growth. Additionally, its operating margin has decreased by 4 percentage points over the last five years, and earnings per share were flat while revenue grew over the last two years.

Alternative: Waste Management (WM)

Waste Management has a strong presence in the waste management industry and has consistently outperformed its peers. With a focus on sustainability and innovation, Waste Management is well-positioned for future growth.

Brookdale (BKD)

Brookdale operates senior living communities across the United States, offering independent living, assisted living, memory care, and continuing care retirement communities. However, the company's sales have tumbled by 4.8% annually over the last five years, and it has struggled to find compelling investment opportunities. Additionally, its limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders.

Alternative: Senior Housing Properties Trust (SNH)

Senior Housing Properties Trust has a strong portfolio of senior living properties and has consistently outperformed its peers. With a focus on sustainability and innovation, Senior Housing Properties Trust is well-positioned for future growth in the senior living industry.

In conclusion, while profits are important, they're not everything when it comes to investing. By avoiding these three profitable companies and investing in their better alternatives, you can build a more durable portfolio that can weather any market conditions. At StockStory, we're here to help you make informed investment decisions and find your next big winner.