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 are two profitable companies that leverage their financial strength to beat the competition and one best left off your watchlist.
One Stock to Sell:
Central Garden & Pet (CENT)
Trailing 12-Month GAAP Operating Margin: 8.1%
Enhancing the lives of both pets and homeowners, Central Garden & Pet (NASDAQ:CENT) is a leading producer and distributor of essential products for pet care, lawn and garden maintenance, and pest control.
Why Is CENT Risky?
- Annual sales declines of 1.9% for the past three years show its products struggled to connect with the market
- Projected sales decline of 5.1% over the next 12 months indicates demand will continue deteriorating
- Low returns on capital reflect management’s struggle to allocate funds effectively
Central Garden & Pet’s stock price of $39.33 implies a valuation ratio of 13.8x forward P/E. Dive into our free research report to see why there are better opportunities than CENT.
Two Stocks to Buy:
Palantir Technologies (PLTR)
Trailing 12-Month GAAP Operating Margin: 42.8%
Named after the all-seeing stones in "Lord of the Rings," Palantir Technologies (NASDAQ:PLTR) develops software platforms that help government agencies and enterprises integrate, analyze, and operationalize their data for decision-making.
Why Will PLTR Outperform?
- Billings growth has averaged 76.7% over the last year, indicating a healthy pipeline of new contracts that should drive future revenue increases
- Software platform has product-market fit given the rapid recovery of its customer acquisition costs
- Robust free cash flow margin of 56.5% gives it many options for capital deployment
Palantir Technologies is trading at $189.63 per share, or 48.6x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.
Quanta (PWR)
Trailing 12-Month GAAP Operating Margin: 6.2%
A construction engineering services company, Quanta (NYSE:PWR) provides infrastructure solutions to a variety of sectors, including energy and communications.
Why Should You Buy PWR?
- Sales pipeline is in good shape as its backlog averaged 25.2% growth over the past two years
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 32.9% outpaced its revenue gains
- Free cash flow margin expanded by 7 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
At $650.78 per share, Quanta trades at 35x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.