Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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 two profitable companies that generate reliable profits without sacrificing growth and one that may face some trouble.
One Stock to Sell:
eHealth (EHTH)
Trailing 12-Month GAAP Operating Margin: 9.4%
Aiming to address a high-stakes and often confusing decision, eHealth (NASDAQ: EHTH) guides consumers through health insurance enrollment and related topics.
Why Are We Wary of EHTH?
- Intense competition is diverting traffic from its platform as its estimated membership fell by 2.2% annually
- Forecasted revenue decline of 2.5% for the upcoming 12 months implies demand will fall off a cliff
- Cash-burning history makes us doubt the long-term viability of its business model
At $5.26 per share, eHealth trades at 4x forward EV/EBITDA. Check out our free in-depth research report to learn more about why EHTH doesn’t pass our bar.
Two Stocks to Buy:
Broadcom (AVGO)
Trailing 12-Month GAAP Operating Margin: 37.7%
Originally the semiconductor division of Hewlett Packard, Broadcom (NASDAQ: AVGO) is a semiconductor conglomerate spanning wireless communications, networking, and data storage as well as infrastructure software focused on mainframes and cybersecurity.
Why Will AVGO Beat the Market?
- Annual revenue growth of 30% over the past two years was outstanding, reflecting market share gains this cycle
- Offerings are difficult to replicate at scale and lead to a best-in-class gross margin of 76.1%
- Robust free cash flow margin of 40.8% gives it many options for capital deployment
Broadcom’s stock price of $369.98 implies a valuation ratio of 44x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free for active Edge members.
McKesson (MCK)
Trailing 12-Month GAAP Operating Margin: 1.2%
With roots dating back to 1833, making it one of America's oldest continuously operating businesses, McKesson (NYSE: MCK) is a healthcare services company that distributes pharmaceuticals, medical supplies, and provides technology solutions to pharmacies, hospitals, and healthcare providers.
Why Are We Backing MCK?
- Annual revenue growth of 15.3% over the last two years beat the sector average and underscores the unique value of its offerings
- Dominant market position is represented by its $377.6 billion in revenue, which creates significant barriers to entry in this highly regulated industry
- Share buybacks catapulted its annual earnings per share growth to 18.3%, which outperformed its revenue gains over the last five years
McKesson is trading at $812.30 per share, or 20.3x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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