Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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. That said, here are two profitable companies that balance growth and profitability and one that may face some trouble.
One Stock to Sell:
Jabil (JBL)
Trailing 12-Month GAAP Operating Margin: 4%
With manufacturing facilities spanning the globe from China to Mexico to the United States, Jabil (NYSE:JBL) provides electronics design, manufacturing, and supply chain solutions to companies across various industries, from healthcare to automotive to cloud computing.
Why Is JBL Not Exciting?
- Sales tumbled by 7.3% annually over the last two years, showing market trends are working against its favor during this cycle
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 6.5% annually
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
At $218.77 per share, Jabil trades at 19.3x forward P/E. Read our free research report to see why you should think twice about including JBL in your portfolio.
Two Stocks to Buy:
Lululemon (LULU)
Trailing 12-Month GAAP Operating Margin: 22.9%
Originally serving yogis and hockey players, Lululemon (NASDAQ:LULU) is a designer, distributor, and retailer of athletic apparel for men and women.
Why Are We Backing LULU?
- Comparable store sales rose by 5.3% on average over the past two years, demonstrating its ability to drive increased spending at existing locations
- Collection of products is difficult to replicate at scale and leads to a best-in-class gross margin of 58.8%
- LULU is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
Lululemon’s stock price of $183.78 implies a valuation ratio of 15.2x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free for active Edge members.
Palomar Holdings (PLMR)
Trailing 12-Month GAAP Operating Margin: 29%
Founded in 2013 to fill gaps in catastrophe insurance markets, Palomar Holdings (NASDAQ:PLMR) is a specialty insurance provider that offers property and casualty insurance products in underserved markets, with a focus on earthquake coverage.
Why Is PLMR a Top Pick?
- Net premiums earned surged by 46.1% annually over the past two years, reflecting strong market share gains this cycle
- Annual book value per share growth of 39.5% over the past two years was outstanding, reflecting strong capital accumulation this cycle
- Expected book value per share growth of 25.4% for the next year suggests its capital position will strengthen considerably
Palomar Holdings is trading at $119.25 per share, or 3.4x forward P/B. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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