A company with profits isn’t always 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. That said, here are two profitable companies that balance growth and profitability and one best left off your watchlist.
One Stock to Sell:
Mission Produce (AVO)
Trailing 12-Month GAAP Operating Margin: 5.2%
Founded in 1983 in California, Mission Produce (NASDAQ: AVO) grows, packages, and distributes avocados.
Why Is AVO Risky?
- Revenue base of $1.31 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Gross margin of 11.2% is an output of its commoditized products
- ROIC of 5.8% reflects management’s challenges in identifying attractive investment opportunities, and its falling returns suggest its earlier profit pools are drying up
At $11.19 per share, Mission Produce trades at 9.9x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than AVO.
Two Stocks to Watch:
AMD (AMD)
Trailing 12-Month GAAP Operating Margin: 9.6%
Founded in 1969 by a group of former Fairchild semiconductor executives led by Jerry Sanders, Advanced Micro Devices (NASDAQ: AMD) is one of the leading designers of computer processors and graphics chips used in PCs and data centers.
Why Are We Positive On AMD?
- Impressive 30.8% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Estimated revenue growth of 16.8% for the next 12 months implies demand will accelerate from its two-year trend
- Earnings growth has trumped its peers over the last five years as its EPS has compounded at 36.9% annually
AMD’s stock price of $110.51 implies a valuation ratio of 24.1x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Photronics (PLAB)
Trailing 12-Month GAAP Operating Margin: 25.2%
Sporting a global footprint of facilities, Photronics (NASDAQ: PLAB) is a manufacturer of photomasks, templates used to transfer patterns onto semiconductor wafers.
Why Do We Like PLAB?
- Operating margin improvement of 14.3 percentage points over the last five years demonstrates its ability to scale efficiently
- Performance over the past five years was boosted by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures, and its rising returns show it’s making even more lucrative bets
Photronics is trading at $16.75 per share, or 8.1x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free.
