Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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 struggle to keep up.
One Stock to Sell:
Charter (CHTR)
Trailing 12-Month GAAP Operating Margin: 24%
Operating as Spectrum, Charter (NASDAQ: CHTR) is a leading telecommunications company offering cable television, high-speed internet, and voice services across the United States.
Why Are We Cautious About CHTR?
- Demand for its offerings was relatively low as its number of internet subscribers has underwhelmed
- Sales are projected to be flat over the next 12 months and imply weak demand
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
Charter’s stock price of $398.41 implies a valuation ratio of 10.3x forward P/E. If you’re considering CHTR for your portfolio, see our FREE research report to learn more.
Two Stocks to Watch:
Semrush (SEMR)
Trailing 12-Month GAAP Operating Margin: 1.7%
Started by Oleg Shchegolev while still in university, Semrush (NYSE: SEMR) is a software-as-a-service platform that helps companies optimize their search engine and content marketing efforts.
Why Do We Like SEMR?
- Billings growth has averaged 24.8% over the last year, indicating a healthy pipeline of new contracts that should drive future revenue increases
- Estimated revenue growth of 18.7% for the next 12 months implies its momentum over the last three years will continue
- Prominent and differentiated software results in a top-tier gross margin of 82.1%
Semrush is trading at $8.83 per share, or 2.8x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
Verra Mobility (VRRM)
Trailing 12-Month GAAP Operating Margin: 15.6%
Aiming to wrap technology and data around a historically manual and paper-based industry, Verra Mobility (NYSE: VRRM) is a leading provider of smart mobility technology to address tolls and violations, title and registration services, as well as safety and traffic enforcement.
Why Is VRRM a Top Pick?
- Annual revenue growth of 13.8% over the past five years was outstanding, reflecting market share gains this cycle
- Offerings are difficult to replicate at scale and result in a best-in-class gross margin of 62.1%
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its rising cash conversion increases its margin of safety
At $25.01 per share, Verra Mobility trades at 18.4x 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
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking 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-small-cap company Comfort Systems (+782% 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
