Companies with solid operating margins have a competitive edge, allowing them to reinvest for sustainable expansion. The best of these businesses balance profitability with reinvestment, setting themselves up for long-term success.

Not all profitable companies are worth your attention, but we’re here to highlight the ones with the most upside. Keeping that in mind, here are three profitable companies that leverage their financial strength to beat the competition.

ServiceNow (NOW)

Trailing 12-Month GAAP Operating Margin: 13.4%

Built on a single code base that processes more than 80 billion workflows and 6.5 trillion transactions annually, ServiceNow (NYSE: NOW) provides a cloud-based platform that helps organizations automate and digitize workflows across departments, from IT and HR to customer service and security.

Why Will NOW Outperform?

1. ARR trends over the last year show it’s maintaining a steady flow of long-term contracts that contribute positively to its revenue predictability
2. Software platform has product-market fit given the rapid recovery of its customer acquisition costs
3. Strong free cash flow margin of 34.6% enables it to reinvest or return capital consistently

ServiceNow’s stock price of $107.33 implies a valuation ratio of 6.7x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.

Pinterest (PINS)

Trailing 12-Month GAAP Operating Margin: 6.3%

Created with the idea of virtually replacing paper catalogues, Pinterest (NYSE: PINS) is an online image and social discovery platform.

Why Do We Love PINS?

1. Has the opportunity to boost monetization through new features and premium offerings as its monthly active users have grown by 11.2% annually over the last two years
2. Performance over the past three years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
3. PINS is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its growing cash flow gives it even more resources to deploy

At $22.33 per share, Pinterest trades at 10x forward EV/EBITDA. Is now the right time to buy? See for yourself in our full research report, it’s free.

Booking (BKNG)

Trailing 12-Month GAAP Operating Margin: 32.6%

Formerly known as The Priceline Group, Booking Holdings (NASDAQ: BKNG) is the world’s largest online travel agency.

Why Do We Like BKNG?

1. Solid 15.1% annual revenue growth over the last three years underscores its platform’s appeal to consumers
2. Share repurchases over the last three years enabled its annual earnings per share growth of 28.9% to outpace its revenue gains
3. Robust free cash flow margin of 33.8% gives it many options for capital deployment

Booking is trading at $178.49 per share, or 12.8x forward EV/EBITDA. Is now the time to initiate a position? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.

But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.

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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.