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.

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 leverage their financial strength to beat the competition and one that may struggle to keep up.

One Stock to Sell:

Fortive (FTV)

Trailing 12-Month GAAP Operating Margin: 17.2%

Taking its name from the Latin root of "strong", Fortive (NYSE: FTV) manufactures products and develops industrial software for numerous industries.

Why Do We Pass on FTV?

1. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
2. Earnings per share were flat over the last five years and fell short of the peer group average
3. Underwhelming 5.5% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its falling returns suggest its earlier profit pools are drying up

At $56.18 per share, Fortive trades at 19.4x forward P/E. Read our free research report to see why you should think twice about including FTV in your portfolio.

Two Stocks to Watch:

DXP (DXPE)

Trailing 12-Month GAAP Operating Margin: 8.7%

Founded during the emergence of Big Oil in Texas, DXP (NASDAQ: DXPE) provides pumps, valves, and other industrial components.

Why Will DXPE Outperform?

1. Annual revenue growth of 13% over the past five years was outstanding, reflecting market share gains this cycle
2. Operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
3. Share repurchases over the last two years enabled its annual earnings per share growth of 27.4% to outpace its revenue gains

DXP’s stock price of $115.25 implies a valuation ratio of 18.7x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.

Genpact (G)

Trailing 12-Month GAAP Operating Margin: 14.9%

Originally spun off from General Electric in 2005 to provide business process services, Genpact (NYSE: G) is a global professional services firm that helps businesses transform their operations through digital technology, AI, and data analytics solutions.

Why Are We Fans of G?

1. Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
2. Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures, and its returns are climbing as it finds even more attractive growth opportunities
3. Improving returns on capital reflect management’s ability to monetize investments

Genpact is trading at $47.89 per share, or 12.5x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.

Stocks We Like Even More

If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.

Don’t wait for the next volatility shock. Check out our Top 5 Growth Stocks for this month. 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-small-cap company Exlservice (+354% 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.