Companies with solid operating margins have a competitive edge, allowing them to reinvest for sustainable expansion. The best of these businesses balance profitability with reinvestment, setting themselves up for long-term success.
Identifying the most compelling profitable companies isn’t always straightforward, and that’s why we started StockStory. That said, here are three profitable companies that leverage their financial strength to beat the competition.
Byrna (BYRN)
Trailing 12-Month GAAP Operating Margin: 9%
Providing civilians with tools to disable, disarm, and deter would-be assailants, Byrna (NASDAQ: BYRN) is a provider of non-lethal weapons.
Why Will BYRN Outperform?
- Market share has increased this cycle as its 40.2% annual revenue growth over the last two years was exceptional
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 99.2% outpaced its revenue gains
- Free cash flow profile has reached break even, showing the company has crossed a key inflection point
Byrna is trading at $22.57 per share, or 35.3x forward EV-to-EBITDA. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
ResMed (RMD)
Trailing 12-Month GAAP Operating Margin: 32.1%
Founded in 1989 to address the then-underdiagnosed condition of sleep apnea, ResMed (NYSE: RMD) develops cloud-connected medical devices and software solutions that treat sleep apnea, COPD, and other respiratory disorders for home and clinical use.
Why Does RMD Stand Out?
- Constant currency growth averaged 12% over the past two years, showing it can expand globally regardless of the macroeconomic environment
- Incremental sales over the last five years have been highly profitable as its earnings per share increased by 15.7% annually, topping its revenue gains
- Free cash flow margin expanded by 7.1 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
ResMed’s stock price of $240.66 implies a valuation ratio of 23.7x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Cintas (CTAS)
Trailing 12-Month GAAP Operating Margin: 22.8%
Starting as a family business collecting and cleaning shop rags in Cincinnati, Cintas (NASDAQ: CTAS) provides corporate identity uniforms, facility services, and safety products to over one million businesses across North America.
Why Are We Backing CTAS?
- 8.6% annual revenue growth over the last two years surpassed the sector average as its services resonated with customers
- Adjusted operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
- Strong free cash flow margin of 16.4% enables it to reinvest or return capital consistently, and its recently improved profitability means it has even more resources to invest or distribute
At $211.82 per share, Cintas trades at 45.4x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks That Overcame Trump’s 2018 Tariffs
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 9 Market-Beating Stocks. 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.
