Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.
A business making money today isn’t necessarily a winner, which is why we analyze companies across multiple dimensions at StockStory. Keeping that in mind, here is one profitable company that generates reliable profits without sacrificing growth and two that may face some trouble.
Two Stocks to Sell:
Addus HomeCare (ADUS)
Trailing 12-Month GAAP Operating Margin: 9%
Serving approximately 66,000 clients across 22 states with a focus on "dual eligible" Medicare and Medicaid beneficiaries, Addus HomeCare (NASDAQ: ADUS) provides in-home personal care, hospice, and home health services to elderly, chronically ill, and disabled individuals.
Why Is ADUS Not Exciting?
- Modest revenue base of $1.21 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- Free cash flow margin has shown no improvement over the last five years
At $111.53 per share, Addus HomeCare trades at 18.1x forward P/E. If you’re considering ADUS for your portfolio, see our FREE research report to learn more.
SAIC (SAIC)
Trailing 12-Month GAAP Operating Margin: 7.5%
With over five decades of experience supporting national security missions, Science Applications International Corporation (NASDAQ: SAIC) provides technical, engineering, and enterprise IT services primarily to U.S. government agencies and military branches.
Why Do We Pass on SAIC?
- Sales tumbled by 1.5% annually over the last two years, showing market trends are working against its favor during this cycle
- Estimated sales growth of 2.7% for the next 12 months is soft and implies weaker demand
- Low returns on capital reflect management’s struggle to allocate funds effectively
SAIC’s stock price of $120.08 implies a valuation ratio of 13.5x forward P/E. Check out our free in-depth research report to learn more about why SAIC doesn’t pass our bar.
One Stock to Buy:
TransDigm (TDG)
Trailing 12-Month GAAP Operating Margin: 45.8%
Supplying parts for nearly all aircraft currently in service, TransDigm (NYSE: TDG) develops and manufactures components and systems for military and commercial aviation.
Why Are We Backing TDG?
- Average organic revenue growth of 14.9% over the past two years demonstrates its ability to expand independently without relying on acquisitions
- Additional sales over the last two years increased its profitability as the 30.8% annual growth in its earnings per share outpaced its revenue
- TDG is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its recently improved profitability means it has even more resources to invest or distribute
TransDigm is trading at $1,405 per share, or 35.1x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking 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 176% over the last five years.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free.
