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.

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 generate reliable profits without sacrificing growth and one that may face some trouble.

One Stock to Sell:

AXIS Capital (AXS)

Trailing 12-Month GAAP Operating Margin: 16.1%

Founded in the aftermath of the 9/11 attacks when insurance capacity was scarce, AXIS Capital Holdings Limited (NYSE: AXS) is a global specialty insurer and reinsurer that provides coverage for complex risks across property, liability, professional lines, cyber, and other specialty markets.

Why Does AXS Give Us Pause?

1. Annual revenue growth of 4.9% over the last five years was below our standards for the insurance sector
2. Sluggish 3.4% annualized growth in net premiums earned over the last two years indicates the firm trailed its insurance peers
3. Underwhelming 9.7% return on equity reflects management’s difficulties in finding profitable growth opportunities

AXIS Capital’s stock price of $98.39 implies a valuation ratio of 1.3x forward P/B. Check out our free in-depth research report to learn more about why AXS doesn’t pass our bar.

Two Stocks to Watch:

AZZ (AZZ)

Trailing 12-Month GAAP Operating Margin: 15.3%

Responsible for projects like nuclear facilities, AZZ (NYSE: AZZ) is a provider of metal coating and power infrastructure solutions.

Why Do We Like AZZ?

1. Healthy operating margin of 14.7% shows it’s a well-run company with efficient processes, and its rise over the last five years was fueled by some leverage on its fixed costs
2. Incremental sales over the last two years have been highly profitable as its earnings per share increased by 24.5% annually, topping its revenue gains
3. Free cash flow margin expanded by 13.5 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends

At $116.44 per share, AZZ trades at 19.2x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.

Molina Healthcare (MOH)

Trailing 12-Month GAAP Operating Margin: 3.8%

Founded in 1980 as a provider for underserved communities in Southern California, Molina Healthcare (NYSE: MOH) provides managed healthcare services primarily to low-income individuals through Medicaid, Medicare, and Marketplace insurance programs across 21 states.

Why Are We Positive On MOH?

1. Impressive 19.7% annual revenue growth over the last five years indicates it’s winning market share this cycle
2. Sizeable revenue base of $43.41 billion gives it economies of scale and favorable reimbursement terms with healthcare providers
3. Earnings growth has comfortably beaten the peer group average over the last five years as its EPS has compounded at 11.1% annually

Molina Healthcare is trading at $176 per share, or 7.6x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

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