A company with profits isn’t always a great investment. Some struggle to maintain growth, face looming threats, or fail to reinvest wisely, limiting their future potential.
Not all profitable companies are created equal, and that’s why we built StockStory - to help you find the ones that truly shine bright. Keeping that in mind, here is one profitable company that leverages its financial strength to beat the competition and two that may face some trouble.
Two Stocks to Sell:
Haemonetics (HAE)
Trailing 12-Month GAAP Operating Margin: 13.1%
With roots dating back to 1971 and a mission to improve blood-related healthcare, Haemonetics (NYSE: HAE) provides specialized medical devices and software for blood collection, processing, and management across plasma centers, blood banks, and hospitals.
Why Does HAE Give Us Pause?
- Sales trends were unexciting over the last five years as its 6.6% annual growth was below the typical healthcare company
- Subscale operations are evident in its revenue base of $1.37 billion, meaning it has fewer distribution channels than its larger rivals
- Forecasted revenue decline of 4.7% for the upcoming 12 months implies demand will fall off a cliff
Haemonetics’s stock price of $62.51 implies a valuation ratio of 12.3x forward price-to-earnings. To fully understand why you should be careful with HAE, check out our full research report (it’s free).
Johnson Controls (JCI)
Trailing 12-Month GAAP Operating Margin: 8.4%
Founded after patenting the electric room thermostat, Johnson Controls (NYSE: JCI) specializes in building products and technology solutions, including HVAC systems, fire and security systems, and energy storage.
Why Are We Out on JCI?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Projected sales growth of 1.8% for the next 12 months suggests sluggish demand
- ROIC of 6.4% reflects management’s challenges in identifying attractive investment opportunities, and its falling returns suggest its earlier profit pools are drying up
At $80.59 per share, Johnson Controls trades at 22.6x forward price-to-earnings. Check out our free in-depth research report to learn more about why JCI doesn’t pass our bar.
One Stock to Buy:
Booking (BKNG)
Trailing 12-Month GAAP Operating Margin: 31.8%
Formerly known as The Priceline Group, Booking Holdings (NASDAQ: BKNG) is the world’s largest online travel agency.
Why Should You Buy BKNG?
- Room Nights Booked have increased by an average of 13.6% annually, giving it the potential for margin-accretive growth if it can develop valuable complementary products and features
- Share repurchases over the last three years enabled its annual earnings per share growth of 60.1% to outpace its revenue gains
- Strong free cash flow margin of 33% enables it to reinvest or return capital consistently, and its growing cash flow gives it even more resources to deploy
Booking is trading at $4,847 per share, or 17.9x forward EV-to-EBITDA. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our 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 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.
