Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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. Keeping that in mind, here are two profitable companies that generate reliable profits without sacrificing growth and one best left off your watchlist.
One Stock to Sell:
Astec (ASTE)
Trailing 12-Month GAAP Operating Margin: 8.3%
Inventing the first ever double-barrel hot-mix asphalt plant, Astec (NASDAQ: ASTE) provides machines and equipment for building roads, processing raw materials, and producing concrete.
Why Does ASTE Worry Us?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 2% annually over the last two years
- Demand cratered as it couldn’t win new orders over the past two years, leading to an average 28.2% decline in its backlog
- Low free cash flow margin of -0.9% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
Astec’s stock price of $47.65 implies a valuation ratio of 16.5x forward P/E. To fully understand why you should be careful with ASTE, check out our full research report (it’s free for active Edge members).
Two Stocks to Watch:
Domino's (DPZ)
Trailing 12-Month GAAP Operating Margin: 19.2%
Founded by two brothers in Michigan, Domino’s (NYSE: DPZ) is a globally recognized pizza chain known for its creative marketing and fast delivery.
Why Are We Positive On DPZ?
- Aggressive strategy of rolling out new restaurants to gobble up whitespace is prudent given its same-store sales growth
- Free cash flow margin jumped by 2.3 percentage points over the last year, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
Domino's is trading at $405.87 per share, or 21.7x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
Quanta (PWR)
Trailing 12-Month GAAP Operating Margin: 5.7%
A construction engineering services company, Quanta (NYSE: PWR) provides infrastructure solutions to a variety of sectors, including energy and communications.
Why Is PWR a Good Business?
- Demand is greater than supply as the company’s 20.3% average backlog growth over the past two years shows it’s securing new contracts and accumulating more orders than it can fulfill
- Sales outlook for the upcoming 12 months implies the business will stay on its desirable two-year growth trajectory
- Earnings per share grew by 25.1% annually over the last two years and trumped its peers
At $459.10 per share, Quanta trades at 38.5x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free for active Edge members.
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 9 Market-Beating Stocks. 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
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