Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.
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 is one profitable company that balances growth and profitability and two that may struggle to keep up.
Two Stocks to Sell:
APi (APG)
Trailing 12-Month GAAP Operating Margin: 6.6%
Started in 1926 as an insulation contractor, APi (NYSE:APG) provides life safety solutions and specialty services for buildings and infrastructure.
Why Are We Wary of APG?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Operating margin of 4.8% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
APi’s stock price of $38.97 implies a valuation ratio of 23.7x forward P/E. If you’re considering APG for your portfolio, see our FREE research report to learn more.
Danaher (DHR)
Trailing 12-Month GAAP Operating Margin: 19%
Born from a real estate investment trust that transformed into a manufacturing powerhouse, Danaher (NYSE:DHR) is a global science and technology company that provides specialized equipment, software, and services for biotechnology, life sciences, and diagnostics.
Why Do We Think Twice About DHR?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Day-to-day expenses have swelled relative to revenue over the last five years as its adjusted operating margin fell by 7.9 percentage points
- Free cash flow margin dropped by 8 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Danaher is trading at $229.37 per share, or 28.2x forward P/E. Read our free research report to see why you should think twice about including DHR in your portfolio.
One Stock to Watch:
Upwork (UPWK)
Trailing 12-Month GAAP Operating Margin: 14.7%
Formed through the 2013 merger of Elance and oDesk, Upwork (NASDAQ:UPWK) is an online platform where businesses and independent professionals connect to get work done.
Why Are We Fans of UPWK?
- Customers are spending more money on its platform as its average revenue per customer has increased by 9.4% annually over the last two years
- Incremental sales over the last three years have been highly profitable as its earnings per share increased by 123% annually, topping its revenue gains
- Free cash flow margin increased by 29.3 percentage points over the last few years, giving the company more capital to invest or return to shareholders
At $20.38 per share, Upwork trades at 10.7x forward EV/EBITDA. Is now a good time to buy? See for yourself in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Check out the high-quality names we’ve flagged in 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 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.