Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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 are two profitable companies that balance growth and profitability and one that may face some trouble.
One Stock to Sell:
Qualys (QLYS)
Trailing 12-Month GAAP Operating Margin: 31.2%
Founded in 1999 as one of the first subscription security companies, Qualys (NASDAQ: QLYS) provides organizations with software to assess their exposure to cyber-attacks.
Why Does QLYS Give Us Pause?
- Offerings struggled to generate meaningful interest as its average billings growth of 5.2% over the last year did not impress
- Estimated sales growth of 6.6% for the next 12 months implies demand will slow from its three-year trend
- Free cash flow margin is forecasted to shrink by 6.9 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
Qualys is trading at $139.60 per share, or 7.7x forward price-to-sales. Dive into our free research report to see why there are better opportunities than QLYS.
Two Stocks to Watch:
Adobe (ADBE)
Trailing 12-Month GAAP Operating Margin: 36.4%
One of the most well-known Silicon Valley software companies around, Adobe (NASDAQ: ADBE) is a leading provider of software as service in the digital design and document management space.
Why Does ADBE Stand Out?
- Software is difficult to replicate at scale and results in a best-in-class gross margin of 89.2%
- Highly efficient business model is illustrated by its impressive 36.4% operating margin, and its profits increased over the last year as it scaled
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
At $366.75 per share, Adobe trades at 6.4x forward price-to-sales. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Coinbase (COIN)
Trailing 12-Month GAAP Operating Margin: 32.4%
Widely regarded as the face of crypto, Coinbase (NASDAQ: COIN) is a blockchain infrastructure company updating the financial system with its trading, staking, stablecoin, and other payment solutions.
Why Are We Backing COIN?
- Customer spending is rising as the company has focused on monetization over the last two years, leading to 58.2% annual growth in its average revenue per user
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 64.5% annually, topping its revenue gains
- COIN 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’s becoming even less capital-intensive
Coinbase’s stock price of $415.10 implies a valuation ratio of 31.9x forward EV/EBITDA. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
When Trump unveiled his aggressive tariff plan in April 2024, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at 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 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
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