While profitability is essential, it doesn’t guarantee long-term success. Some companies that rest on their margins will lose ground as competition intensifies - as Jeff Bezos said, "Your margin is my opportunity".
A business making money today isn’t necessarily a winner, which is why we analyze companies across multiple dimensions at StockStory. That said, here are two profitable companies that balance growth and profitability and one that may struggle to keep up.
One Stock to Sell:
AutoNation (AN)
Trailing 12-Month GAAP Operating Margin: 4.5%
With a vast network of over 300 locations strategically concentrated in America's Sunbelt region, AutoNation (NYSE: AN) operates one of America's largest networks of automotive dealerships, selling new and used vehicles, parts, and services across multiple brands.
Why Should You Dump AN?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
- Widely-available products (and therefore stiff competition) result in an inferior gross margin of 17.9% that must be offset through higher volumes
- Incremental sales over the last three years were much less profitable as its earnings per share fell by 5.7% annually while its revenue grew
AutoNation’s stock price of $214.34 implies a valuation ratio of 10.3x forward P/E. Dive into our free research report to see why there are better opportunities than AN.
Two Stocks to Buy:
CECO Environmental (CECO)
Trailing 12-Month GAAP Operating Margin: 14%
With roots dating back to 1869 and a focus on creating cleaner industrial operations, CECO Environmental (NASDAQ: CECO) provides technology and expertise that helps industrial companies reduce emissions, treat water, and improve energy efficiency across various sectors.
Why Will CECO Outperform?
- Annual revenue growth of 19% over the last two years was superb and indicates its market share increased during this cycle
- Adjusted operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
- Returns on capital are increasing as management’s prior bets are starting to bear fruit
At $66.21 per share, CECO Environmental trades at 50.5x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
Moelis (MC)
Trailing 12-Month GAAP Operating Margin: 18.7%
Founded in 2007 by veteran banker Ken Moelis during the lead-up to the financial crisis, Moelis & Company (NYSE: MC) is an independent investment bank that provides strategic and financial advisory services to corporations, financial sponsors, governments, and sovereign wealth funds.
Why Do We Love MC?
- Market share has increased this cycle as its 32.5% annual revenue growth over the last two years was exceptional
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 299% over the last two years outstripped its revenue performance
- ROE punches in at 44.9%, illustrating management’s expertise in identifying profitable investments
Moelis is trading at $76.84 per share, or 23.8x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
