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:
Crocs (CROX)
Trailing 12-Month GAAP Operating Margin: 20.7%
Founded in 2002, Crocs (NASDAQ:CROX) sells casual footwear and is known for its iconic clog shoe.
Why Do We Pass on CROX?
- Weak constant currency growth over the past two years indicates challenges in maintaining its market share
- Poor expense management has led to an operating margin of 13.5% that is below the industry average
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Crocs’s stock price of $120.50 implies a valuation ratio of 8.4x forward P/E. If you’re considering CROX for your portfolio, see our FREE research report to learn more.
Two Stocks to Watch:
ResMed (RMD)
Trailing 12-Month GAAP Operating Margin: 33.4%
Founded in 1989 to address the then-underdiagnosed condition of sleep apnea, ResMed (NYSE:RMD) develops cloud-connected medical devices and software solutions that treat sleep apnea, COPD, and other respiratory disorders for home and clinical use.
Why Are We Fans of RMD?
- Business is well-positioned no matter the global macroeconomic backdrop as its constant currency revenue growth averaged 8.9% over the past two years
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Free cash flow margin jumped by 23.1 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
ResMed is trading at $240.13 per share, or 19.8x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
HCA Healthcare (HCA)
Trailing 12-Month GAAP Operating Margin: 15.7%
With roots dating back to 1968 and a network spanning 20 states, HCA Healthcare (NYSE:HCA) operates a network of 190 hospitals and 150+ outpatient facilities providing a full range of medical services across the US and England.
Why Is HCA a Top Pick?
- Enormous revenue base of $78.01 billion gives it economies of scale and advantages over new entrants due to the industry’s regulatory complexity
- Share buybacks catapulted its annual earnings per share growth to 15.4%, which outperformed its revenue gains over the last five years
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
At $418.34 per share, HCA Healthcare trades at 13.6x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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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.