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 balance growth and profitability and one best left off your watchlist.
One Stock to Sell:
Salesforce (CRM)
Trailing 12-Month GAAP Operating Margin: 20.4%
With its cloud-based platform named after its stock ticker symbol CRM (Customer Relationship Management), Salesforce (NYSE: CRM) provides customer relationship management software that helps businesses connect with their customers across sales, service, marketing, and commerce.
Why Does CRM Fall Short?
- Products, pricing, or go-to-market strategy may need some adjustments as its 10.5% average billings growth over the last year was weak
- Projected sales growth of 10% for the next 12 months suggests sluggish demand
- Operating profits increased over the last year as the company gained some leverage on its fixed costs and became more efficient
Salesforce’s stock price of $191.89 implies a valuation ratio of 3.5x forward price-to-sales. To fully understand why you should be careful with CRM, check out our full research report (it’s free).
Two Stocks to Watch:
Coca-Cola (KO)
Trailing 12-Month GAAP Operating Margin: 29.7%
A pioneer and behemoth in carbonated soft drinks, Coca-Cola (NYSE: KO) is a storied beverage company best known for its flagship soda.
Why Do We Watch KO?
- Unique products and pricing power are reflected in its best-in-class gross margin of 61.7%
- Disciplined cost controls and effective management resulted in a strong two-year operating margin of 28.8%, and it turbocharged its profits by achieving some fixed cost leverage
- Free cash flow margin increased by 30.1 percentage points over the last year, giving the company more capital to invest or return to shareholders
Coca-Cola is trading at $87.11 per share, or 25.6x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Acuity Brands (AYI)
Trailing 12-Month GAAP Operating Margin: 14.5%
One of the pioneers of smart lights, Acuity (NYSE: AYI) designs and manufactures light fixtures and building management systems used in various industries.
Why Does AYI Stand Out?
- 9.8% annual revenue growth over the last two years surpassed the sector average as its offerings resonated with customers
- Offerings are difficult to replicate at scale and lead to a best-in-class gross margin of 45.7%
- Free cash flow margin jumped by 8.6 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
At $359.58 per share, Acuity Brands trades at 16.8x 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
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum 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.
