Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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 is one profitable company that generates reliable profits without sacrificing growth and two that may face some trouble.
Two Stocks to Sell:
Q2 Holdings (QTWO)
Trailing 12-Month GAAP Operating Margin: 10%
With a platform powering digital services for approximately 25 million account holders across America, Q2 Holdings (NYSE: QTWO) provides cloud-based digital solutions that help financial institutions, fintechs, and alternative finance companies deliver modern banking experiences to their customers.
Why Is QTWO Not Exciting?
- Customers had second thoughts about committing to its platform over the last year as its average billings growth of 7.7% underwhelmed
- Estimated sales growth of 9.6% for the next 12 months implies demand will slow from its two-year trend
- Gross margin of 57% reflects its high servicing costs
At $66.01 per share, Q2 Holdings trades at 4.4x forward price-to-sales. Read our free research report to see why you should think twice about including QTWO in your portfolio.
Himax (HIMX)
Trailing 12-Month GAAP Operating Margin: 4.9%
Taiwan-based Himax Technologies (NASDAQ: HIMX) is a leading manufacturer of display driver chips and timing controllers used in TVs, laptops, and mobile phones.
Why Do We Avoid HIMX?
- Annual sales declines of 7% for the past five years show its products and services struggled to connect with the market during this cycle
- Free cash flow margin shrank by 16.3 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- High net-debt-to-EBITDA ratio of 6× increases the risk of forced asset sales or dilutive financing if operational performance weakens
Himax is trading at $12.12 per share, or 13.9x forward P/E. Check out our free in-depth research report to learn more about why HIMX doesn’t pass our bar.
One Stock to Buy:
LPL Financial (LPLA)
Trailing 12-Month GAAP Operating Margin: 9.1%
As the nation's largest independent broker-dealer with no proprietary products of its own, LPL Financial (NASDAQ: LPLA) provides technology, compliance, and business support services to independent financial advisors and institutions who manage investments for retail clients.
Why Should You Buy LPLA?
- Impressive 33.9% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Industry-leading 37.1% return on equity demonstrates management’s skill in finding high-return investments
LPL Financial’s stock price of $321.94 implies a valuation ratio of 11.8x 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
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-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
