Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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 are two profitable companies that balance growth and profitability and one that may face some trouble.
One Stock to Sell:
Griffon (GFF)
Trailing 12-Month GAAP Operating Margin: 17.5%
Initially in the defense industry, Griffon (NYSE: GFF) is a now diversified company specializing in home improvement, professional equipment, and building products.
Why Does GFF Give Us Pause?
- Annual sales declines of 5.2% for the past two years show its products and services struggled to connect with the market during this cycle
- Estimated sales growth of 1.4% for the next 12 months is soft and implies weaker demand
Griffon is trading at $71.07 per share, or 12.4x forward P/E. Dive into our free research report to see why there are better opportunities than GFF.
Two Stocks to Watch:
Lululemon (LULU)
Trailing 12-Month GAAP Operating Margin: 23.7%
Originally serving yogis and hockey players, Lululemon (NASDAQ: LULU) is a designer, distributor, and retailer of athletic apparel for men and women.
Why Is LULU a Top Pick?
- Locations open for at least a year are seeing increased demand as same-store sales have averaged 8.2% growth over the past two years
- Unique assortment of products and pricing power result in a best-in-class gross margin of 58.8%
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
At $277.01 per share, Lululemon trades at 18x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
RBC Bearings (RBC)
Trailing 12-Month GAAP Operating Margin: 22.5%
With a Guinness World Record for engineering the largest spherical plain bearing, RBC Bearings (NYSE: RBC) is a manufacturer of bearings and related components for the aerospace & defense, industrial, and transportation industries.
Why Does RBC Catch Our Eye?
- Annual revenue growth of 17.4% over the past five years was outstanding, reflecting market share gains this cycle
- Highly efficient business model is illustrated by its impressive 19.8% operating margin, and it turbocharged its profits by achieving some fixed cost leverage
- Earnings growth has trumped its peers over the last two years as its EPS has compounded at 22.1% annually
RBC Bearings’s stock price of $344.69 implies a valuation ratio of 32.9x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.
