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 are two profitable companies that balance growth and profitability and one that may face some trouble.
One Stock to Sell:
Universal Technical Institute (UTI)
Trailing 12-Month GAAP Operating Margin: 10.4%
Founded in 1965, Universal Technical Institute (NYSE: UTI) is a leading provider of technical training programs, specializing in automotive, diesel, collision repair, motorcycle, and marine technicians.
Why Should You Dump UTI?
- Estimated sales growth of 9.1% for the next 12 months implies demand will slow from its two-year trend
- Below-average returns on capital indicate management struggled to find compelling investment opportunities, and its shrinking returns suggest its past profit sources are losing steam
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
At $26.38 per share, Universal Technical Institute trades at 11.6x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including UTI in your portfolio.
Two Stocks to Watch:
Light & Wonder (LNW)
Trailing 12-Month GAAP Operating Margin: 21.9%
With names as crazy as Ultimate Fire Link Power 4 for its products, Light & Wonder (NASDAQ: LNW) is a gaming company supplying the casino industry with slot machines, table games, and digital games.
Why Do We Like LNW?
- Excellent operating margin of 21.4% highlights the efficiency of its business model
- Share repurchases over the last five years enabled its annual earnings per share growth of 25.9% to outpace its revenue gains
- Rising returns on capital show the company is starting to reap the benefits of its past investments
Light & Wonder’s stock price of $89.75 implies a valuation ratio of 13.4x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Centene (CNC)
Trailing 12-Month GAAP Operating Margin: 1.1%
Serving nearly 1 in 15 Americans through its government healthcare programs, Centene (NYSE: CNC) is a healthcare company that manages government-sponsored health insurance programs like Medicaid and Medicare for low-income and complex-needs populations.
Why Does CNC Stand Out?
- Offerings and unique value proposition resonate with customers, as seen in its above-market 14.2% annual sales growth over the last five years
- Enormous revenue base of $178.2 billion gives it leverage over plan holders and advantageous reimbursement terms with healthcare providers
- Returns on capital are increasing as management’s prior bets are starting to bear fruit
Centene is trading at $29.48 per share, or 7.8x 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
When Trump unveiled his aggressive tariff plan in April 2025, 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
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
