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".
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 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:
Verizon (VZ)
Trailing 12-Month GAAP Operating Margin: 23%
Formed in 1984 as Bell Atlantic after the breakup of Bell System into seven companies, Verizon (NYSE: VZ) is a telecom giant providing a range of communications and internet services.
Why Is VZ Risky?
- Customer additions have disappointed over the past two years, indicating the company’s value proposition may not be resonating
- Free cash flow margin is projected to show no improvement next year
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
At $39.69 per share, Verizon trades at 8.4x forward P/E. Check out our free in-depth research report to learn more about why VZ doesn’t pass our bar.
STERIS (STE)
Trailing 12-Month GAAP Operating Margin: 17.1%
With a mission critical role in preventing healthcare-associated infections, STERIS (NYSE: STE) provides infection prevention products, sterilization services, and medical equipment that help healthcare facilities and life science companies maintain sterile environments.
Why Do We Think Twice About STE?
- Underwhelming 4.9% return on capital reflects management’s difficulties in finding profitable growth opportunities
STERIS is trading at $263.19 per share, or 24.4x forward P/E. If you’re considering STE for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
Molina Healthcare (MOH)
Trailing 12-Month GAAP Operating Margin: 3%
Founded in 1980 as a provider for underserved communities in Southern California, Molina Healthcare (NYSE: MOH) provides managed healthcare services primarily to low-income individuals through Medicaid, Medicare, and Marketplace insurance programs across 21 states.
Why Do We Like MOH?
- Impressive 19.3% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Scale advantages are evident in its $44.55 billion revenue base, which provides operating leverage when demand is strong
- Earnings per share grew by 5.8% annually over the last five years and slightly topped the peer group average
Molina Healthcare’s stock price of $196.44 implies a valuation ratio of 17.2x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Check out the high-quality names we’ve flagged in our 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 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.
