Spotting Winners: Mister Car Wash (NASDAQ:MCW) And Specialized Consumer Services Stocks In Q1

Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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 are three profitable companies to steer clear of and a few better alternatives.

TreeHouse Foods (THS)

Trailing 12-Month GAAP Operating Margin: 3.1%

Whether it be packaged crackers, broths, or beverages, Treehouse Foods produces a wide range of private-label foods for grocery and food service customers.

Why Do We Avoid THS?

• Shrinking unit sales over the past two years show it’s struggled to move its products and had to rely on price increases
• Gross margin of 16.5% is below its competitors, leaving less money to invest in areas like marketing and production facilities
• ROIC of 1.4% reflects management’s challenges in identifying attractive investment opportunities

At $20.44 per share, TreeHouse Foods trades at 10.6x forward P/E. Dive into our free research report to see why there are better opportunities than THS.

Frontdoor (FTDR)

Trailing 12-Month GAAP Operating Margin: 18.2%

Established in 2018 as a spin-off from ServiceMaster Global Holdings, Frontdoor is a provider of home warranty and service plans.

Why Does FTDR Give Us Pause?

• Sluggish trends in its home service plans suggest customers aren’t adopting its solutions as quickly as the company hoped
• Free cash flow margin is forecasted to shrink by 2.4 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
• Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

Frontdoor is trading at $57.99 per share, or 18.9x forward P/E. To fully understand why you should be careful with FTDR, check out our full research report (it’s free).

Interface (TILE)

Trailing 12-Month GAAP Operating Margin: 10.1%

Pioneering carbon-neutral flooring since its founding in 1973, Interface is a global manufacturer of modular carpet tiles, luxury vinyl tile (LVT), and rubber flooring that specializes in carbon-neutral and sustainable flooring solutions.

Why Do We Think TILE Will Underperform?

• Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last five years
• Performance over the past five years shows each sale was less profitable, as its earnings per share fell by 3.5% annually
• Below-average returns on capital indicate management struggled to find compelling investment opportunities

Interface’s stock price of $20.07 implies a valuation ratio of 7.3x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including TILE in your portfolio.

High-Quality Stocks for All Market Conditions

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return).

The Russell 2000 is home to many small-cap stocks, offering investors the chance to uncover hidden gems before the broader market catches on. However, these companies often come with higher volatility and risk, as their smaller size makes them more vulnerable to economic downturns.

The high-risk, high-reward nature of the Russell 2000 makes stock selection critical, and we’re here to guide you toward the right ones. That said, here are three Russell 2000 stocks that don’t make the cut and some better choices instead.

1-800-FLOWERS (FLWS)

Market Cap: $328 million

Founded in 1976, 1-800-FLOWERS is an online retailer of flowers, gifts, and gourmet foods, serving customers globally.

Why Are We Out on FLWS?

• Products and services have few die-hard fans as sales have declined by 9.9% annually over the last two years
• Incremental sales over the last five years were much less profitable as its earnings per share fell by 24.2% annually while its revenue grew
• Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value

1-800-FLOWERS’s stock price of $5.37 implies a valuation ratio of 17.6x forward P/E. Check out our free in-depth research report to learn more about why FLWS doesn’t pass our bar.

Heartland Express (HTLD)

Market Cap: $685 million

Founded by the son of a trucker, Heartland Express offers full-truckload deliveries across the United States and Mexico.

Why Do We Pass on HTLD?

• Products and services are facing significant end-market challenges during this cycle as sales have declined by 6.8% annually over the last two years
• 10.8 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
• Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

Heartland Express is trading at $8.92 per share, or 4.4x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than HTLD.

Fulton Financial (FULT)

Market Cap: $3.11 billion

Tracing its roots back to 1882 in the heart of Pennsylvania, Fulton Financial is a financial holding company that provides banking, lending, and wealth management services to consumers and businesses across five Mid-Atlantic states.

Why Are We Hesitant About FULT?

• Estimated net interest income growth of 3.1% for the next 12 months implies demand will slow from its four-year trend
• Capital trends were unexciting over the last five years as its 4.4% annual tangible book value per share growth was below the typical bank company
• Estimated tangible book value per share growth of 7.3% for the next 12 months implies profitability will slow from its two-year trend

At $17.10 per share, Fulton Financial trades at 1x forward P/B. Read our free research report to see why you should think twice about including FULT in your portfolio.

High-Quality Stocks for All Market Conditions

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return).