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".
A business making money today isn’t necessarily a winner, which is why we analyze companies across multiple dimensions at StockStory. That said, here are two profitable companies that balance growth and profitability and one that may face some trouble.
One Stock to Sell:
L.B. Foster (FSTR)
Trailing 12-Month GAAP Operating Margin: 3.7%
Founded with a $2,500 loan, L.B. Foster (NASDAQ: FSTR) is a provider of products and services for the transportation and energy infrastructure sectors, including rail products, construction materials, and coating solutions.
Why Do We Avoid FSTR?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 1.6% annually over the last five years
- Low free cash flow margin of 0.3% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- ROIC of 4.5% reflects management’s challenges in identifying attractive investment opportunities
L.B. Foster is trading at $27.84 per share, or 13.5x forward P/E. Dive into our free research report to see why there are better opportunities than FSTR.
Two Stocks to Watch:
Dick's (DKS)
Trailing 12-Month GAAP Operating Margin: 10.9%
Started as a hunting supply store, Dick’s Sporting Goods (NYSE: DKS) is a retailer that sells merchandise for traditional sports as well as for fitness and outdoor activities.
Why Could DKS Be a Winner?
- Comparable store sales rose by 4.3% on average over the past two years, demonstrating its ability to drive increased spending at existing locations
- Earnings per share have comfortably outperformed the peer group average over the last six years, increasing by 27.5% annually
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
Dick’s stock price of $222.80 implies a valuation ratio of 15x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
WisdomTree (WT)
Trailing 12-Month GAAP Operating Margin: 32.8%
Originally founded as a financial media company before pivoting to ETF management in 2006, WisdomTree (NYSE: WT) is a financial services company that creates and manages exchange-traded funds (ETFs) and other investment products for individual and institutional investors.
Why Is WT a Top Pick?
- Market share has increased this cycle as its 18.6% annual revenue growth over the last two years was exceptional
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 62.9% outpaced its revenue gains
- Industry-leading 13.3% return on equity demonstrates management’s skill in finding high-return investments
At $14.10 per share, WisdomTree trades at 17.4x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
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 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
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