Even if a company is profitable, it doesn’t always mean it’s a great investment. Some struggle to maintain growth, face looming threats, or fail to reinvest wisely, limiting their future potential.
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 leverage their financial strength to beat the competition and one that may struggle to keep up.
One Stock to Sell:
Dollar General (DG)
Trailing 12-Month GAAP Operating Margin: 5.6%
Appealing to the budget-conscious consumer, Dollar General (NYSE: DG) is a discount retailer that sells a wide range of household essentials, groceries, apparel/beauty products, and seasonal merchandise.
Why Are We Hesitant About DG?
- Annual sales growth of 4% over the last three years lagged behind its consumer retail peers as its large revenue base made it difficult to generate incremental demand
- Gross margin of 30.7% is an output of its commoditized inventory
- Underwhelming 8.8% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its decreasing returns suggest its historical profit centers are aging
Dollar General’s stock price of $124.37 implies a valuation ratio of 15.3x forward P/E. Read our free research report to see why you should think twice about including DG in your portfolio.
Two Stocks to Watch:
EPAM (EPAM)
Trailing 12-Month GAAP Operating Margin: 10%
Founded in 1993 during the early days of offshore software development, EPAM Systems (NYSE: EPAM) provides digital engineering, cloud, and AI transformation services to help global enterprises and startups modernize their technology systems and create digital products.
Why Are We Positive on EPAM?
- Impressive 13.1% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Earnings per share have comfortably outperformed the peer group average over the last five years, increasing by 11.4% annually
- Industry-leading 21% return on capital demonstrates management’s skill in finding high-return investments
EPAM is trading at $113.54 per share, or 8x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Affiliated Managers Group (AMG)
Trailing 12-Month GAAP Operating Margin: 14.7%
Using a partnership approach that preserves entrepreneurial culture at its portfolio companies, Affiliated Managers Group (NYSE: AMG) is an investment firm that acquires stakes in boutique asset management companies while allowing them to maintain operational independence.
What Makes AMG Stand Out?
- Annual revenue growth of 14% over the last two years beat the sector average and underscores the unique value of its offerings
- Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
At $387.01 per share, Affiliated Managers Group trades at 9.5x forward P/E. Is now the right time to buy? 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.
