Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.
Not all profitable companies are created equal, and that’s why we built StockStory - to help you find the ones that truly shine bright. That said, here are two profitable companies that balance growth and profitability and one that may struggle to keep up.
One Stock to Sell:
Gartner (IT)
Trailing 12-Month GAAP Operating Margin: 18.3%
With over 2,500 research experts guiding organizations through complex technology landscapes, Gartner (NYSE:IT) provides research, advisory services, and conferences that help executives make better decisions about technology and other business priorities.
Why Are We Hesitant About IT?
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 9.3% annually
Gartner’s stock price of $398.96 implies a valuation ratio of 32.1x forward P/E. Dive into our free research report to see why there are better opportunities than IT.
Two Stocks to Buy:
ServiceNow (NOW)
Trailing 12-Month GAAP Operating Margin: 12.9%
Founded by Fred Luddy, who coded the company's initial prototype on a flight from San Francisco to London, ServiceNow (NYSE:NOW) is a software provider helping companies automate workflows across IT, HR, and customer service.
Why Is NOW a Top Pick?
- Sales pipeline is in good shape as its current remaining performance obligations (cRPO) averaged 22.3% growth over the last year
- Healthy operating margin of 12.9% shows it’s a well-run company with efficient processes, and its rise over the last year was fueled by some leverage on its fixed costs
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
At $986 per share, ServiceNow trades at 15.1x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
Nova (NVMI)
Trailing 12-Month GAAP Operating Margin: 28.7%
Headquartered in Israel, Nova (NASDAQ:NVMI) is a provider of quality control systems used in semiconductor manufacturing.
Why Should You Buy NVMI?
- Annual revenue growth of 14.3% over the last two years was superb and indicates its market share increased during this cycle
- Robust free cash flow margin of 28.6% gives it many options for capital deployment, and its improved cash conversion implies it’s becoming a less capital-intensive business
- ROIC punches in at 31.2%, illustrating management’s expertise in identifying profitable investments
Nova is trading at $238 per share, or 28.4x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Stocks We Like Even More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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-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