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".

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:

Avnet (AVT)

Trailing 12-Month GAAP Operating Margin: 2.8%

With a century-long history of adapting to technological evolution, Avnet (NASDAQ: AVT) is a global electronic components distributor that connects manufacturers of semiconductors and other electronic parts with businesses that need these components.

Why Are We Wary of AVT?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 8.5% annually over the last two years
2. Earnings per share have contracted by 34.7% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
3. Low free cash flow margin of -0.1% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders

Avnet is trading at $52.21 per share, or 10x forward P/E. To fully understand why you should be careful with AVT, check out our full research report (it’s free).

Two Stocks to Watch:

Limbach (LMB)

Trailing 12-Month GAAP Operating Margin: 8.3%

Established in 1901, Limbach (NASDAQ: LMB) provides integrated building systems solutions, including mechanical, electrical, and plumbing services.

Why Does LMB Stand Out?

1. Operating margin increased by 6.2 percentage points over the last five years as it refined its cost structure
2. Additional sales over the last two years increased its profitability as the 45.1% annual growth in its earnings per share outpaced its revenue
3. Free cash flow margin jumped by 5.9 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends

Limbach’s stock price of $90.30 implies a valuation ratio of 20.9x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.

Abbott Laboratories (ABT)

Trailing 12-Month GAAP Operating Margin: 17.4%

With roots dating back to 1888 when founder Dr. Wallace Abbott began producing precise, dosage-form medications, Abbott Laboratories (NYSE: ABT) develops and sells a diverse range of healthcare products including medical devices, diagnostics, nutrition products, and branded generic pharmaceuticals.

Why Could ABT Be a Winner?

1. Economies of scale in a highly regulated sector make the company difficult to replace, giving it meaningful negotiating power
2. Share repurchases over the last five years enabled its annual earnings per share growth of 10.2% to outpace its revenue gains
3. ABT is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders

At $133.35 per share, Abbott Laboratories trades at 24.6x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.

Stocks We Like Even More

When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.

Don’t let fear keep you from great opportunities and take a look at Top 5 Strong Momentum 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

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