Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.

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 leverage their financial strength to beat the competition and one that may face some trouble.

One Stock to Sell:

Dover (DOV)

Trailing 12-Month GAAP Operating Margin: 16.3%

A company that manufactured critical equipment for the United States military during World War II, Dover (NYSE: DOV) manufactures engineered components and specialized equipment for numerous industries.

Why Do We Avoid DOV?

1. 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
2. Earnings per share lagged its peers over the last two years as they only grew by 3.2% annually
3. Diminishing returns on capital suggest its earlier profit pools are drying up

Dover’s stock price of $175.02 implies a valuation ratio of 17.9x forward P/E. Read our free research report to see why you should think twice about including DOV in your portfolio.

Two Stocks to Buy:

EXL (EXLS)

Trailing 12-Month GAAP Operating Margin: 15.2%

Originally founded as an outsourcing company in 1999 before evolving into a technology-focused enterprise, EXL (NASDAQ: EXLS) provides data analytics and AI-powered digital operations solutions that help businesses transform their operations and make better decisions.

Why Is EXLS a Good Business?

1. Market share has increased this cycle as its 15.1% annual revenue growth over the last five years was exceptional
2. Share repurchases have amplified shareholder returns as its annual earnings per share growth of 25.5% exceeded its revenue gains over the last five years
3. Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends

At $42 per share, EXL trades at 21.3x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.

HCI Group (HCI)

Trailing 12-Month GAAP Operating Margin: 25.8%

Starting as a Florida "take-out" insurer that assumed policies from the state-backed Citizens Property Insurance Corporation, HCI Group (NYSE: HCI) provides property and casualty insurance, primarily homeowners coverage, while leveraging proprietary technology to improve underwriting and claims processing.

Why Are We Backing HCI?

1. Market share has increased this cycle as its 24.2% annual net premiums earned growth over the last two years was exceptional
2. Impressive 52.2% annual book value per share growth over the last two years indicates it’s building equity value this cycle
3. Capital strength will likely rise over the next 12 months as its expected book value per share growth of 22.2% is robust

HCI Group is trading at $138.86 per share, or 2.4x forward P/B. Is now the right time to buy? Find out in our full 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.

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