Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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 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 is one profitable company that generates reliable profits without sacrificing growth and two that may struggle to keep up.

Two Stocks to Sell:

Himax (HIMX)

Trailing 12-Month GAAP Operating Margin: 7.5%

Taiwan-based Himax Technologies (NASDAQ:HIMX) is a leading manufacturer of display driver chips and timing controllers used in TVs, laptops, and mobile phones.

Why Does HIMX Worry Us?

1. Annual sales declines of 13.1% for the past two years show its products and services struggled to connect with the market during this cycle

2. Sales are projected to tank by 5% over the next 12 months as its demand continues evaporating

3. Responsiveness to unforeseen market trends is restricted due to its substandard operating profitability

At $7.20 per share, Himax trades at 35.4x forward price-to-earnings. To fully understand why you should be careful with HIMX, check out our full research report (it’s free) .

MasTec (MTZ)

Trailing 12-Month GAAP Operating Margin: 3.5%

Involved in the 1996 Olympic Games MasTec (NYSE:MTZ) is an infrastructure construction company that specializes in the telecommunications, energy, and utility industries.

Why Are We Hesitant About MTZ?

1. Gross margin of 13.3% reflects its high production costs

2. Incremental sales over the last five years were much less profitable as its earnings per share fell by 6.3% annually while its revenue grew

3. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value

MasTec’s stock price of $125.10 implies a valuation ratio of 23.9x forward price-to-earnings. Read our free research report to see why you should think twice about including MTZ in your portfolio, it’s free .

One Stock to Watch:

e.l.f. Beauty (ELF)

Trailing 12-Month GAAP Operating Margin: 10%

Short for "eyes, lips, face", e.l.f. Beauty (NYSE:ELF) is a developer of high-quality beauty products at accessible price points.

Why Are We Fans of ELF?

1. Remarkable 50.8% revenue growth over the last three years demonstrates its ability to capture significant market share

2. Products command premium prices and lead to a best-in-class gross margin of 70.8%

3. Earnings growth has massively outpaced its peers over the last three years as its EPS has compounded at 52.9% annually