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. That said, here is one profitable company that generates reliable profits without sacrificing growth and two that may struggle to keep up.
Two Stocks to Sell:
Salesforce (CRM)
Trailing 12-Month GAAP Operating Margin: 20.5%
With its cloud-based platform named after its stock ticker symbol CRM (Customer Relationship Management), Salesforce (NYSE: CRM) provides customer relationship management software that helps businesses connect with their customers across sales, service, marketing, and commerce.
Why Is CRM Not Exciting?
- ARR growth averaged a weak 9.1% over the last year, suggesting that competition is pulling some attention away from its software
- Anticipated sales growth of 11.8% for the next year implies demand will be shaky
- Operating profits and efficiency rose over the last year as it benefited from some fixed cost leverage
Salesforce’s stock price of $259.10 implies a valuation ratio of 5.5x forward price-to-sales. Check out our free in-depth research report to learn more about why CRM doesn’t pass our bar.
Graham Corporation (GHM)
Trailing 12-Month GAAP Operating Margin: 6.1%
Founded when its founder patented a unique design for a vacuum system used in the sugar refining process, Graham (NYSE: GHM) provides vacuum and heat transfer equipment for the energy, petrochemical, refining, and chemical sectors.
Why Do We Think Twice About GHM?
- Responsiveness to unforeseen market trends is restricted due to its substandard operating margin profitability
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
Graham Corporation is trading at $72.05 per share, or 48.3x forward P/E. If you’re considering GHM for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Watts Water Technologies (WTS)
Trailing 12-Month GAAP Operating Margin: 18%
Founded in 1874, Watts Water (NYSE: WTS) specializes in manufacturing water products and systems for residential, commercial, and industrial applications globally.
Why Is WTS a Top Pick?
- 9.3% annual revenue growth over the last five years surpassed the sector average as its offerings resonated with customers
- Offerings are difficult to replicate at scale and result in a best-in-class gross margin of 45.9%
- Share buybacks catapulted its annual earnings per share growth to 21.8%, which outperformed its revenue gains over the last five years
At $287.73 per share, Watts Water Technologies trades at 26x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 9 Market-Beating Stocks. 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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
