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 are two profitable companies that leverage their financial strength to beat the competition and one that may struggle to keep up.
One Stock to Sell:
Corcept (CORT)
Trailing 12-Month GAAP Operating Margin: 16.2%
Focusing on the powerful stress hormone that affects everything from metabolism to immune function, Corcept Therapeutics (NASDAQ: CORT) develops and markets medications that modulate cortisol to treat endocrine disorders, cancer, and neurological diseases.
Why Are We Cautious About CORT?
- Subscale operations are evident in its revenue base of $685.4 million, meaning it has fewer distribution channels than its larger rivals
- Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 16.2 percentage points
- 16.1 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
Corcept’s stock price of $70.01 implies a valuation ratio of 34.6x forward P/E. If you’re considering CORT for your portfolio, see our FREE research report to learn more.
Two Stocks to Watch:
Texas Roadhouse (TXRH)
Trailing 12-Month GAAP Operating Margin: 9.4%
With locations often featuring Western-inspired decor, Texas Roadhouse (NASDAQ: TXRH) is an American restaurant chain specializing in Southern-style cuisine and steaks.
Why Do We Love TXRH?
- Rapid rollout of new restaurants to capitalize on market opportunities makes sense given its strong same-store sales performance
- Average same-store sales growth of 7.9% over the past two years indicates its restaurants are resonating with diners
- ROIC punches in at 18.7%, illustrating management’s expertise in identifying profitable investments, and its returns are growing as it capitalizes on even better market opportunities
Texas Roadhouse is trading at $196 per share, or 27.5x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Limbach (LMB)
Trailing 12-Month GAAP Operating Margin: 8.2%
Established in 1901, Limbach (NASDAQ: LMB) provides integrated building systems solutions, including mechanical, electrical, and plumbing services.
Why Does LMB Catch Our Eye?
- Efficiency rose over the last five years as its Operating margin increased by 5.3 percentage points
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 53.3% over the last two years outstripped its revenue performance
- ROIC punches in at 22.9%, illustrating management’s expertise in identifying profitable investments, and its rising returns show it’s making even more lucrative bets
At $131.77 per share, Limbach trades at 32x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking 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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.
