Profitability is a key measure of business strength. Companies with high margins have proven they can generate consistent earnings while maintaining financial discipline.
Not all profitable companies are worth your attention, but we’re here to highlight the ones with the most upside. Keeping that in mind, here are three profitable companies that leverage their financial strength to beat the competition.
Granite Construction (GVA)
Trailing 12-Month GAAP Operating Margin: 6.3%
Having played a role in the construction of the Hoover Dam, Granite Construction (NYSE: GVA) is a provider of infrastructure solutions for roads, bridges, and other projects.
Why Could GVA Be a Winner?
- Annual revenue growth of 13.2% over the past two years was outstanding, reflecting market share gains this cycle
- Share buybacks catapulted its annual earnings per share growth to 37.4%, which outperformed its revenue gains over the last two years
- Free cash flow margin expanded by 11.5 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
At $156.70 per share, Granite Construction trades at 23x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Synchrony Financial (SYF)
Trailing 12-Month GAAP Operating Margin: 33.2%
Powering over 73 million active accounts and partnerships with major brands like Amazon, PayPal, and Lowe's, Synchrony Financial (NYSE: SYF) provides credit cards, installment loans, and banking products through partnerships with retailers, healthcare providers, and digital platforms.
Why Is SYF a Top Pick?
- Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 37.9% annually
- Impressive 15.9% annual tangible book value per share growth over the last five years indicates it’s building equity value this cycle
- Stellar return on equity showcases management’s ability to surface highly profitable business ventures
Synchrony Financial’s stock price of $78.21 implies a valuation ratio of 7.9x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
ConocoPhillips (COP)
Trailing 12-Month GAAP Operating Margin: 20.5%
Operating the famous Prudhoe Bay field discovered in 1968 that transformed Alaska's economy, ConocoPhillips (NYSE: COP) explores for and produces crude oil, natural gas, and liquefied natural gas across North America, Europe, Asia, and Africa.
Why Are We Backing COP?
- Annual revenue growth of 8% over the last ten years was superb and indicates its market share increased during this cycle
- Enormous revenue base of $60.5 billion provides significant leverage in supplier negotiations
- Strong free cash flow margin of 17.3% enables it to reinvest or return capital consistently
ConocoPhillips is trading at $106.51 per share, or 10.3x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
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