Even if a company is profitable, it doesn’t always mean it’s a great investment. Some struggle to maintain growth, face looming threats, or fail to reinvest wisely, limiting their future potential.
Profits are valuable, but they’re not everything. At StockStory, we help you identify the companies that have real staying power. That said, here are two profitable companies that generate reliable profits without sacrificing growth and one that may face some trouble.
One Stock to Sell:
Korn Ferry (KFY)
Trailing 12-Month GAAP Operating Margin: 12.5%
With clients including 97% of the S&P 100 and operations in 103 offices across 51 countries, Korn Ferry (NYSE: KFY) is a global consulting firm that helps organizations design optimal structures, recruit talent, develop leaders, and create effective compensation strategies.
Why Is KFY Risky?
- Annual sales declines of 1.8% for the past two years show its products and services struggled to connect with the market during this cycle
- Earnings per share were flat over the last two years and fell short of the peer group average
- Waning returns on capital imply its previous profit engines are losing steam
At $73.65 per share, Korn Ferry trades at 14.7x forward P/E. To fully understand why you should be careful with KFY, check out our full research report (it’s free).
Two Stocks to Watch:
Stride (LRN)
Trailing 12-Month GAAP Operating Margin: 16.5%
Formerly known as K12, Stride (NYSE: LRN) is an education technology company providing education solutions through digital platforms.
Why Is LRN a Top Pick?
- Rise in enrollments indicates high demand for its offerings
- Free cash flow margin increased by 6 percentage points over the last five years, giving the company more capital to invest or return to shareholders
- Improving returns on capital reflect management’s ability to monetize investments
Stride’s stock price of $133.25 implies a valuation ratio of 17.8x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Hubbell (HUBB)
Trailing 12-Month GAAP Operating Margin: 19.7%
A respected player in the electrical segment, Hubbell (NYSE: HUBB) manufactures electronic products for the construction, industrial, utility, and telecommunications markets.
Why Could HUBB Be a Winner?
- Operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 16.6% annually, topping its revenue gains
- Industry-leading 25.5% return on capital demonstrates management’s skill in finding high-return investments, and its returns are growing as it capitalizes on even better market opportunities
Hubbell is trading at $418.42 per share, or 23.4x forward P/E. Is now the time to initiate a position? Find out in our full 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 Strong Momentum Stocks for this week. 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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