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 balance growth and profitability and one that may struggle to keep up.

One Stock to Sell:

REV Group (REVG)

Trailing 12-Month GAAP Operating Margin: 6%

Offering the first full-electric North American fire truck, REV (NYSE: REVG) manufactures and sells specialty vehicles.

Why Are We Wary of REVG?

1. Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last five years
2. Gross margin of 12% is below its competitors, leaving less money to invest in areas like marketing and R&D
3. Responsiveness to unforeseen market trends is restricted due to its substandard operating margin profitability

At $49.54 per share, REV Group trades at 17.3x forward P/E. To fully understand why you should be careful with REVG, check out our full research report (it’s free).

Two Stocks to Buy:

Texas Roadhouse (TXRH)

Trailing 12-Month GAAP Operating Margin: 9.4%

With locations often featuring Western-inspired decor, Texas Roadhouse (NASDAQ: TXRH) is an American restaurant chain specializing in Southern-style cuisine and steaks.

Why Should You Buy TXRH?

1. Aggressive strategy of rolling out new restaurants to gobble up whitespace is prudent given its same-store sales growth
2. Same-store sales growth over the past two years shows it’s successfully drawing diners into its restaurants
3. Industry-leading 18.7% 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

Texas Roadhouse is trading at $185.25 per share, or 25.8x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.

Kinsale Capital Group (KNSL)

Trailing 12-Month GAAP Operating Margin: 32.7%

Founded in 2009 during the aftermath of the financial crisis when many insurers were retreating from riskier markets, Kinsale Capital Group (NYSE: KNSL) is an insurance company that specializes in writing policies for hard-to-place, unusual, or high-risk businesses that standard insurers typically avoid.

Why Is KNSL a Top Pick?

1. Market share has increased this cycle as its 25.9% annual net premiums earned growth over the last two years was exceptional
2. Annual book value per share growth of 40.2% over the last two years was superb and indicates its capital strength increased during this cycle
3. Notable projected book value per share growth of 25.5% for the next 12 months hints at strong capital generation

Kinsale Capital Group’s stock price of $444.49 implies a valuation ratio of 5.5x forward P/B. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.

Stocks We Like Even More

Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 5 Growth Stocks for this month. 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.

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