Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.
Not all profitable companies are created equal, and that’s why we built StockStory - to help you find the ones that truly shine bright. That said, here are two profitable companies that leverage their financial strength to beat the competition and one best left off your watchlist.
One Stock to Sell:
Plexus (PLXS)
Trailing 12-Month GAAP Operating Margin: 5.1%
With over 20,000 team members across 26 global facilities, Plexus (NASDAQ: PLXS) designs, manufactures, and services complex electronic products for companies in aerospace/defense, healthcare, and industrial sectors.
Why Do We Think Twice About PLXS?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 2.1% annually over the last two years
- Poor free cash flow margin of 2.7% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Eroding returns on capital suggest its historical profit centers are aging
At $153.30 per share, Plexus trades at 20.7x forward P/E. If you’re considering PLXS for your portfolio, see our FREE research report to learn more.
Two Stocks to Watch:
Booking (BKNG)
Trailing 12-Month GAAP Operating Margin: 32.7%
Formerly known as The Priceline Group, Booking Holdings (NASDAQ: BKNG) is the world’s largest online travel agency.
Why Do We Like BKNG?
- Platform and reputation resonate with consumers, as seen in its above-market 17.6% annual sales growth over the last three years
- Share repurchases over the last three years enabled its annual earnings per share growth of 34.1% to outpace its revenue gains
- Strong free cash flow margin of 34.3% enables it to reinvest or return capital consistently, and its improved cash conversion implies it’s becoming a less capital-intensive business
Booking’s stock price of $5,370 implies a valuation ratio of 16.2x forward EV/EBITDA. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
Leidos (LDOS)
Trailing 12-Month GAAP Operating Margin: 11.9%
Formed through the split of IT services company SAIC, Leidos (NYSE: LDOS) offers technology and engineering solutions such as military training systems for the defense, civil, and health markets.
Why Does LDOS Stand Out?
- Average backlog growth of 15.2% over the past two years shows it has a steady sales pipeline that will drive future orders
- Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Free cash flow margin grew by 3.3 percentage points over the last five years, giving the company more chips to play with
Leidos is trading at $196.25 per share, or 15.6x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
Stocks We Like Even More
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 6 Stocks for this week. 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 Exlservice (+354% 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.
