Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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 generate reliable profits without sacrificing growth and one best left off your watchlist.
One Stock to Sell:
DXC (DXC)
Trailing 12-Month GAAP Operating Margin: 6.9%
Born from the 2017 merger of Computer Sciences Corporation and HP Enterprise's services business, DXC Technology (NYSE: DXC) is a global IT services company that helps businesses transform their technology infrastructure, applications, and operations.
Why Should You Sell DXC?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Earnings per share have dipped by 9.2% annually over the past five years, which is concerning because stock prices follow EPS over the long term
- Below-average returns on capital indicate management struggled to find compelling investment opportunities, and its falling returns suggest its earlier profit pools are drying up
At $14.97 per share, DXC trades at 4.4x forward P/E. Dive into our free research report to see why there are better opportunities than DXC.
Two Stocks to Watch:
Ulta (ULTA)
Trailing 12-Month GAAP Operating Margin: 13.7%
Offering high-end prestige brands as well as lower-priced, mass-market ones, Ulta Beauty (NASDAQ: ULTA) is an American retailer that sells makeup, skincare, haircare, and fragrance products.
Why Do We Like ULTA?
- New store openings and solid same-store sales performance have boosted its top-line growth
- Robust free cash flow margin of 8.6% gives it many options for capital deployment
- ROIC punches in at 31.2%, illustrating management’s expertise in identifying profitable investments, and its returns are climbing as it finds even more attractive growth opportunities
Ulta is trading at $458.51 per share, or 19.5x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
BioMarin Pharmaceutical (BMRN)
Trailing 12-Month GAAP Operating Margin: 21%
Pioneering treatments for conditions that often had no previous therapeutic options, BioMarin Pharmaceutical (NASDAQ: BMRN) develops and commercializes therapies that address the root causes of rare genetic disorders, particularly those affecting children.
Why Could BMRN Be a Winner?
- Annual revenue growth of 16.5% over the past two years was outstanding, reflecting market share gains this cycle
- Performance over the past five years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 22.8% outpaced its revenue gains
- Free cash flow margin increased by 14.9 percentage points over the last five years, giving the company more capital to invest or return to shareholders
BioMarin Pharmaceutical’s stock price of $55.42 implies a valuation ratio of 12.1x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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
