Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.
Profits are valuable, but they’re not everything. At StockStory, we help you identify the companies that have real staying power. Keeping that in mind, here are two profitable companies that leverage their financial strength to beat the competition and one best left off your watchlist.
One Stock to Sell:
DXC (DXC)
Trailing 12-Month GAAP Operating Margin: 3.5%
Born from the 2017 merger of Computer Sciences Corporation and HP Enterprise's services business, DXC Technology (NYSE: DXC) is a global IT services company that helps businesses transform their technology infrastructure, applications, and operations.
Why Do We Avoid DXC?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Projected sales decline of 3.6% over the next 12 months indicates demand will continue deteriorating
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
DXC’s stock price of $9.53 implies a valuation ratio of 3.4x forward P/E. If you’re considering DXC for your portfolio, see our FREE research report to learn more.
Two Stocks to Buy:
Limbach (LMB)
Trailing 12-Month GAAP Operating Margin: 6.8%
Established in 1901, Limbach (NASDAQ: LMB) provides integrated building systems solutions, including mechanical, electrical, and plumbing services.
Why Do We Love LMB?
- Market share has increased this cycle as its 12.6% annual revenue growth over the last two years was exceptional
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 29.1% annually, topping its revenue gains
- Free cash flow margin jumped by 7.3 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
At $77.59 per share, Limbach trades at 17.2x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Tradeweb Markets (TW)
Trailing 12-Month GAAP Operating Margin: 42.5%
Founded in 1996 as one of the pioneers in electronic bond trading, Tradeweb Markets (NASDAQ: TW) builds and operates electronic marketplaces that connect financial institutions for trading across rates, credit, equities, and money markets.
Why Is TW a Good Business?
- Annual revenue growth of 23.4% over the last two years was superb and indicates its market share increased during this cycle
- Earnings per share have massively outperformed its peers over the last two years, increasing by 23.5% annually
Tradeweb Markets is trading at $101.49 per share, or 24.3x 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 (+1,326% between June 2020 and June 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.
