Profitability is a key measure of business strength. Companies with high margins have proven they can generate consistent earnings while maintaining financial discipline.
Even among profitable businesses, only a select few truly maximize their potential - and StockStory is here to help you find them. Keeping that in mind, here are three profitable companies that leverage their financial strength to beat the competition.
KLA Corporation (KLAC)
Trailing 12-Month GAAP Operating Margin: 38.1%
Formed by the 1997 merger of the two leading semiconductor yield management companies, KLA Corporation (NASDAQ: KLAC) is the leading supplier of equipment used to measure and inspect semiconductor chips.
Why Do We Love KLAC?
- Annual revenue growth of 15.6% over the past five years was outstanding, reflecting market share gains this cycle
- Excellent operating margin of 35.9% highlights the efficiency of its business model, and its rise over the last five years was fueled by some leverage on its fixed costs
- Robust free cash flow margin of 31.2% gives it many options for capital deployment
KLA Corporation’s stock price of $924 implies a valuation ratio of 29.3x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Distribution Solutions (DSGR)
Trailing 12-Month GAAP Operating Margin: 6.1%
Founded in 1952, Distribution Solutions (NASDAQ: DSGR) provides supply chain solutions and distributes industrial, safety, and maintenance products to various industries.
Why Will DSGR Beat the Market?
- Annual revenue growth of 17.8% over the last two years was superb and indicates its market share increased during this cycle
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 24.9% annually, topping its revenue gains
- Free cash flow margin expanded by 3.8 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
At $28.58 per share, Distribution Solutions trades at 16.5x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Abbott Laboratories (ABT)
Trailing 12-Month GAAP Operating Margin: 16.8%
With roots dating back to 1888 when founder Dr. Wallace Abbott began producing precise, dosage-form medications, Abbott Laboratories (NYSE: ABT) develops and sells a diverse range of healthcare products including medical devices, diagnostics, nutrition products, and branded generic pharmaceuticals.
Why Is ABT on Our Radar?
- Large revenue base of $42.34 billion gives it negotiating leverage and staying power in an industry with high barriers to entry
- ABT is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
Abbott Laboratories is trading at $132.01 per share, or 24.8x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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 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 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
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