Even if a company is profitable, it doesn’t always mean it’s a great investment. Some struggle to maintain growth, face looming threats, or fail to reinvest wisely, limiting their future potential.
A business making money today isn’t necessarily a winner, which is why we analyze companies across multiple dimensions at StockStory. That said, here are two profitable companies that leverage their financial strength to beat the competition and one that may face some trouble.
One Stock to Sell:
Inspired (INSE)
Trailing 12-Month GAAP Operating Margin: 11.7%
Specializing in digital casino gaming, Inspired (NASDAQ: INSE) is a provider of gaming hardware, virtual sports platforms, and server-based gaming systems.
Why Are We Wary of INSE?
- 1.1% annual revenue growth over the last two years was slower than its consumer discretionary peers
- Sales are projected to tank by 1.8% over the next 12 months as demand evaporates
- Poor free cash flow margin of 1.8% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
Inspired is trading at $9.38 per share, or 2.5x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why INSE doesn’t pass our bar.
Two Stocks to Watch:
Shopify (SHOP)
Trailing 12-Month GAAP Operating Margin: 12.4%
Starting with just three people selling snowboards online in 2004, Shopify (NYSE: SHOP) provides a comprehensive platform that enables merchants of all sizes to create, manage and grow their businesses across multiple sales channels.
Why Is SHOP a Top Pick?
- Billings have averaged 29.5% growth over the last year, showing it’s securing new contracts that could potentially increase in value over time
- Revenue outlook for the upcoming 12 months is outstanding and shows it’s on track to gain market share
- Well-designed software integrates seamlessly with other workflows, enabling swift payback periods on marketing expenses and customer growth at scale
Shopify’s stock price of $152.29 implies a valuation ratio of 16.1x forward price-to-sales. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
BioMarin Pharmaceutical (BMRN)
Trailing 12-Month GAAP Operating Margin: 25.3%
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 Do We Like BMRN?
- Annual revenue growth of 17.1% over the past two years was outstanding, reflecting market share gains this cycle
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 22.2% over the last five years outstripped its revenue performance
- Free cash flow margin expanded by 13.6 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
At $55 per share, BioMarin Pharmaceutical trades at 12.5x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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