Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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

Profits are valuable, but they’re not everything. At StockStory, we help you identify the companies that have real staying power. That said, here is one profitable company that leverages its financial strength to beat the competition and two that may struggle to keep up.

Two Stocks to Sell:

Warner Music Group (WMG)

Trailing 12-Month GAAP Operating Margin: 10.8%

Launching the careers of legendary artists like Frank Sinatra, Warner Music Group (NASDAQ:WMG) is a music company managing a diverse portfolio of artists, recordings, and music publishing services worldwide.

Why Are We Hesitant About WMG?

1. Annual revenue growth of 4.6% over the last two years was below our standards for the consumer discretionary sector

2. Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 3.8%

3. Low returns on capital reflect management’s struggle to allocate funds effectively

Warner Music Group is trading at $29.27 per share, or 21.4x forward price-to-earnings. Check out our free in-depth research report to learn more about why WMG doesn’t pass our bar .

AECOM (ACM)

Trailing 12-Month GAAP Operating Margin: 5.6%

Founded in 1990 when a group of engineers from five companies decided to merge, AECOM (NYSE:ACM) provides various infrastructure consulting services.

Why Do We Think Twice About ACM?

1. New orders were hard to come by as its backlog was flat over the past two years

2. Gross margin of 6.3% reflects its high production costs

3. Poor expense management has led to an operating margin of 4.2% that is below the industry average

At $97.30 per share, AECOM trades at 18.9x forward price-to-earnings. If you’re considering ACM for your portfolio, see our FREE research report to learn more .

One Stock to Buy:

Tetra Tech (TTEK)

Trailing 12-Month GAAP Operating Margin: 9.2%

With a 50-year legacy of "Leading with Science" and operations on all seven continents, Tetra Tech (NASDAQ:TTEK) provides high-end consulting and engineering services focused on water management, environmental solutions, and sustainable infrastructure for government and commercial clients worldwide.

Why Are We Bullish on TTEK?

1. Market share has increased this cycle as its 24.8% annual revenue growth over the last two years was exceptional

2. Demand is greater than supply as the company’s 19.1% average backlog growth over the past two years shows it’s securing new contracts and accumulating more orders than it can fulfill

3. Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue