While profitability is essential, it doesn’t guarantee long-term success. Some companies that rest on their margins will lose ground as competition intensifies - as Jeff Bezos said, "Your margin is my opportunity".
Profits are valuable, but they’re not everything. At StockStory, we help you identify the companies that have real staying power. Keeping that in mind, here is one profitable company that balances growth and profitability and two best left off your watchlist.
Two Stocks to Sell:
Amkor (AMKR)
Trailing 12-Month GAAP Operating Margin: 6.3%
Operating through a largely Asian facility footprint, Amkor Technologies (NASDAQ: AMKR) provides outsourced packaging and testing for semiconductors.
Why Do We Steer Clear of AMKR?
- Sales tumbled by 5.1% annually over the last two years, showing market trends are working against its favor during this cycle
- High input costs result in an inferior gross margin of 14.5% that must be offset through higher volumes
- Operating margin of 6.9% has deteriorated over the last five years, hampering its adaptability and competitive positioning
Amkor is trading at $21.30 per share, or 12.4x forward P/E. To fully understand why you should be careful with AMKR, check out our full research report (it’s free).
Ziff Davis (ZD)
Trailing 12-Month GAAP Operating Margin: 8%
Originally a pioneering technology publisher founded in 1927 that became famous for PC Magazine, Ziff Davis (NASDAQ: ZD) operates a portfolio of digital media brands and subscription services across technology, shopping, gaming, healthcare, and cybersecurity markets.
Why Do We Pass on ZD?
- Sales were flat over the last five years, indicating it’s failed to expand this cycle
- Sales over the last five years were less profitable as its earnings per share fell by 1.6% annually while its revenue was flat
- 17.6 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
At $30.50 per share, Ziff Davis trades at 4.3x forward P/E. If you’re considering ZD for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Philip Morris (PM)
Trailing 12-Month GAAP Operating Margin: 36.2%
Founded in 1847, Philip Morris International (NYSE: PM) manufactures and sells a wide range of tobacco and nicotine-containing products, including cigarettes, heated tobacco products, and oral nicotine pouches.
Why Is PM a Good Business?
- Unit sales averaged 3% growth over the past two years and imply healthy demand for its products
- Products command premium prices and result in a best-in-class gross margin of 64.8%
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its rising cash conversion increases its margin of safety
Philip Morris’s stock price of $180.99 implies a valuation ratio of 24.2x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive 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 183% over the last five years (as of March 31st 2025).
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. Find your next big winner with StockStory today. Find your next big winner with StockStory today
