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. That said, here is one profitable company that leverages its financial strength to beat the competition and two that may struggle to keep up.
Two Stocks to Sell:
ZoomInfo (ZI)
Trailing 12-Month GAAP Operating Margin: 8.7%
Founded in 2007 as DiscoveryOrg and renamed after a merger in 2019, ZoomInfo (NASDAQ: ZI) is a software as a service product that provides sales departments with access to a database of prospective clients.
Why Are We Hesitant About ZI?
- Flat billings over the last year suggest it may need to improve its products, pricing, or go-to-market strategy to reinvigorate demand
- Software platform has intricate integration requirements for its enterprise clients, triggering long sales cycles that limit new customer additions
- Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 10.3 percentage points
At $10.28 per share, ZoomInfo trades at 2.9x forward price-to-sales. Dive into our free research report to see why there are better opportunities than ZI.
ESAB (ESAB)
Trailing 12-Month GAAP Operating Margin: 15.9%
Having played a significant role in the construction of the iconic Sydney Opera House, ESAB (NYSE: ESAB) manufactures and sells welding and cutting equipment for numerous industries.
Why Is ESAB Risky?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Estimated sales growth of 2.6% for the next 12 months is soft and implies weaker demand
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 4.6 percentage points
ESAB is trading at $109.27 per share, or 18.9x forward P/E. If you’re considering ESAB for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Wingstop (WING)
Trailing 12-Month GAAP Operating Margin: 24.7%
The passion project of two chicken wing aficionados in Texas, Wingstop (NASDAQ: WING) is a popular fast-food chain known for its flavorful and crispy chicken wings offered in a variety of sauces and seasonings.
Why Are We Backing WING?
- Offensive push to build new restaurants and attack its untapped market opportunities is backed by its same-store sales growth
- Average same-store sales growth of 14.6% over the past two years indicates its restaurants are resonating with diners
- Disciplined cost controls and effective management resulted in a strong two-year operating margin of 25.5%
Wingstop’s stock price of $338.60 implies a valuation ratio of 77.6x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
Donald Trump’s April 2024 "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 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-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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