Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.
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:
Encompass Health (EHC)
Trailing 12-Month GAAP Operating Margin: 17.3%
With a network of 161 specialized facilities across 37 states and Puerto Rico, Encompass Health (NYSE: EHC) operates inpatient rehabilitation hospitals that help patients recover from strokes, hip fractures, and other debilitating conditions.
Why Do We Think Twice About EHC?
- 4.3% annual revenue growth over the last five years was slower than its healthcare peers
- Free cash flow margin shrank by 1 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
At $124.03 per share, Encompass Health trades at 23.4x forward P/E. To fully understand why you should be careful with EHC, check out our full research report (it’s free).
Two Stocks to Watch:
Grand Canyon Education (LOPE)
Trailing 12-Month GAAP Operating Margin: 27%
Founded in 1949, Grand Canyon Education (NASDAQ: LOPE) is an educational services provider known for its operation at Grand Canyon University.
Why Could LOPE Be a Winner?
- Highly efficient business model is illustrated by its impressive 26.8% operating margin
- Industry-leading 31.8% return on capital demonstrates management’s skill in finding high-return investments, and its returns are climbing as it finds even more attractive growth opportunities
- Returns on capital are growing as management capitalizes on its market opportunities
Grand Canyon Education is trading at $200.80 per share, or 22x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Intuitive Surgical (ISRG)
Trailing 12-Month GAAP Operating Margin: 28.8%
Pioneering minimally invasive surgery since its first da Vinci system was FDA-cleared in 2000, Intuitive Surgical (NASDAQ: ISRG) develops and manufactures robotic-assisted surgical systems that enable minimally invasive procedures across various medical specialties.
Why Should ISRG Be on Your Watchlist?
- System Placement averaged 11.4% growth over the past two years and imply healthy demand for its products
- Estimated revenue growth of 14.2% for the next 12 months implies its momentum over the last two years will continue
- Earnings growth has trumped its peers over the last five years as its EPS has compounded at 17.7% annually
Intuitive Surgical’s stock price of $480.61 implies a valuation ratio of 57.4x 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
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 9 Market-Beating Stocks. 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
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.
