Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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. Keeping that in mind, here are two profitable companies that generate reliable profits without sacrificing growth and one best left off your watchlist.
One Stock to Sell:
CSX (CSX)
Trailing 12-Month GAAP Operating Margin: 32%
Established as part of the Chessie System and Seaboard Coast Line Industries merger, CSX (NASDAQ: CSX) is a transportation company specializing in freight rail services.
Why Should You Sell CSX?
- Weak unit sales over the past two years imply it may need to invest in improvements to get back on track
- Sales were less profitable over the last two years as its earnings per share fell by 6.5% annually, worse than its revenue declines
- Free cash flow margin dropped by 18.9 percentage points over the last five years, implying the company became more capital intensive as competition picked up
At $36.03 per share, CSX trades at 19.4x forward P/E. Dive into our free research report to see why there are better opportunities than CSX.
Two Stocks to Watch:
Nova (NVMI)
Trailing 12-Month GAAP Operating Margin: 28.9%
Headquartered in Israel, Nova (NASDAQ: NVMI) is a provider of quality control systems used in semiconductor manufacturing.
Why Are We Backing NVMI?
- Annual revenue growth of 21.1% over the last two years was superb and indicates its market share increased during this cycle
- Earnings per share grew by 34.1% annually over the last five years, massively outpacing its peers
- Robust free cash flow margin of 28.2% gives it many options for capital deployment
Nova’s stock price of $331 implies a valuation ratio of 38.7x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .
Acuity Brands (AYI)
Trailing 12-Month GAAP Operating Margin: 13%
One of the pioneers of smart lights, Acuity (NYSE: AYI) designs and manufactures light fixtures and building management systems used in various industries.
Why Do We Like AYI?
- Offerings are difficult to replicate at scale and lead to a stellar gross margin of 44.5%
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
Acuity Brands is trading at $364.93 per share, or 18.3x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
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 Kadant (+351% 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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