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.
Not all profitable companies are created equal, and that’s why we built StockStory - to help you find the ones that truly shine bright. Keeping that in mind, here are two profitable companies that leverage their financial strength to beat the competition and one that may struggle to keep up.
One Stock to Sell:
Utz (UTZ)
Trailing 12-Month GAAP Operating Margin: 3.9%
Tracing its roots back to 1921 when Bill and Salie Utz began making potato chips in their kitchen, Utz Brands (NYSE: UTZ) offers salty snacks such as potato chips, tortilla chips, pretzels, cheese snacks, and ready-to-eat popcorn, among others.
Why Do We Avoid UTZ?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Smaller revenue base of $1.41 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
Utz’s stock price of $14.04 implies a valuation ratio of 16.1x forward P/E. Read our free research report to see why you should think twice about including UTZ in your portfolio.
Two Stocks to Watch:
Dynatrace (DT)
Trailing 12-Month GAAP Operating Margin: 10.6%
Founded in Austria in 2005, Dynatrace (NYSE: DT) provides companies with software that allows them to monitor the performance of their full technology stack, from software applications to the infrastructure they run on.
Why Could DT Be a Winner?
- ARR growth averaged 17.6% over the last year, showing customers are willing to take multi-year bets on its offerings
- Prominent and differentiated software culminates in a premier gross margin of 81.9%
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Dynatrace is trading at $53.51 per share, or 8.3x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
Costco (COST)
Trailing 12-Month GAAP Operating Margin: 3.8%
Designed to be a one-stop shop for the suburban consumer, Costco (NASDAQ: COST) is a membership-only retail chain that sells groceries, apparel, toys, and household items, often in bulk quantities.
Why Are We Bullish on COST?
- Comparable store sales rose by 5% on average over the past two years, demonstrating its ability to drive increased spending at existing locations
- Unparalleled revenue scale of $268.8 billion offsets its poor gross margin and gives it advantageous pricing and terms with suppliers
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
At $951 per share, Costco trades at 49x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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 6 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-micro-cap company Tecnoglass (+1,754% 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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