Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.
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 is one profitable company that balances growth and profitability and two that may struggle to keep up.
Two Stocks to Sell:
DigitalOcean (DOCN)
Trailing 12-Month GAAP Operating Margin: 17.4%
Built for simplicity in a world of complex cloud solutions, DigitalOcean (NYSE: DOCN) provides a simplified cloud computing platform that enables developers and small businesses to quickly deploy and scale applications.
Why Does DOCN Worry Us?
- Customers were hesitant to make long-term commitments to its software as its 14.2% average ARR growth over the last year was sluggish
- Net revenue retention rate of 99.2% shows it has a tough time retaining customers
- Gross margin of 59.5% is way below its competitors, leaving less money to invest in areas like marketing and R&D
At $44.53 per share, DigitalOcean trades at 4.5x forward price-to-sales. If you’re considering DOCN for your portfolio, see our FREE research report to learn more.
IMAX (IMAX)
Trailing 12-Month GAAP Operating Margin: 18.4%
Originally developed for World Expo '67 in Montreal as an innovative projection system, IMAX (NYSE: IMAX) provides proprietary large-format cinema technology and systems that deliver immersive movie experiences with enhanced image quality and sound.
Why Do We Think Twice About IMAX?
- Sales tumbled by 1.2% annually over the last two years, showing market trends are working against its favor during this cycle
- Modest revenue base of $377.7 million gives it less fixed cost leverage and fewer distribution channels than larger companies
- ROIC of 1.8% reflects management’s challenges in identifying attractive investment opportunities
IMAX’s stock price of $35.58 implies a valuation ratio of 24.4x forward P/E. Check out our free in-depth research report to learn more about why IMAX doesn’t pass our bar.
One Stock to Watch:
Dave (DAVE)
Trailing 12-Month GAAP Operating Margin: 29.1%
Named after the biblical David fighting financial Goliaths, Dave (NASDAQ: DAVE) is a digital financial services platform that helps Americans living paycheck to paycheck with cash advances, banking services, and tools to improve their financial health.
Why Could DAVE Be a Winner?
- Market share has increased this cycle as its 41.4% annual revenue growth over the last two years was exceptional
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 137% annually, topping its revenue gains
Dave is trading at $199.16 per share, or 14.3x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .
High-Quality Stocks for All Market Conditions
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in 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 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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
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