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 is one profitable company that leverages its financial strength to beat the competition and two best left off your watchlist.
Two Stocks to Sell:
Paylocity (PCTY)
Trailing 12-Month GAAP Operating Margin: 19.4%
Founded by payroll software veteran Steve Sarowitz in 1997, Paylocity (NASDAQ: PCTY) is a provider of payroll and HR software for small and medium-sized enterprises.
Why Are We Hesitant About PCTY?
- Estimated sales growth of 8.3% for the next 12 months implies demand will slow from its three-year trend
- Gross margin of 68.8% reflects its relatively high servicing costs
At $176.78 per share, Paylocity trades at 6x forward price-to-sales. Read our free research report to see why you should think twice about including PCTY in your portfolio.
Alamo (ALG)
Trailing 12-Month GAAP Operating Margin: 10.2%
Expanding its markets through acquisitions since its founding, Alamo (NSYE:ALG) designs, manufactures, and services vegetation management and infrastructure maintenance equipment for governmental, industrial, and agricultural use.
Why Should You Sell ALG?
- Sales stagnated over the last two years and signal the need for new growth strategies
- Projected sales growth of 2.8% for the next 12 months suggests sluggish demand
- Flat earnings per share over the last two years lagged its peers
Alamo’s stock price of $214.51 implies a valuation ratio of 21x forward P/E. If you’re considering ALG for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Comfort Systems (FIX)
Trailing 12-Month GAAP Operating Margin: 11.2%
Formed through the merger of 12 companies, Comfort Systems (NYSE: FIX) provides mechanical and electrical contracting services.
Why Will FIX Beat the Market?
- Sales pipeline is in good shape as its backlog averaged 30.5% growth over the past two years
- Earnings per share grew by 67.6% annually over the last two years and trumped its peers
- Returns on capital are climbing as management makes more lucrative bets
Comfort Systems is trading at $499.58 per share, or 26.7x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out 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 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. Find your next big winner with StockStory today. Find your next big winner with StockStory today