While profitability is essential, it doesn’t guarantee long-term success. Some companies that rest on their margins will lose ground as competition intensifies - as Jeff Bezos said, "Your margin is my opportunity".
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 balance growth and profitability and one that may face some trouble.
One Stock to Sell:
NVR (NVR)
Trailing 12-Month GAAP Operating Margin: 16.9%
Known for its unique land acquisition strategy, NVR (NYSE:NVR) is a respected homebuilder and mortgage company in the United States.
Why Does NVR Worry Us?
- Flat backlog over the past two years has disappointed and shows fewer customers signed long-term contracts
- Incremental sales over the last two years were much less profitable as its earnings per share fell by 2.1% annually while its revenue grew
- Waning returns on capital imply its previous profit engines are losing steam
NVR’s stock price of $7,497 implies a valuation ratio of 18.3x forward P/E. Read our free research report to see why you should think twice about including NVR in your portfolio.
Two Stocks to Watch:
Medpace (MEDP)
Trailing 12-Month GAAP Operating Margin: 21.5%
Founded in 1992 as a scientifically-driven alternative to traditional contract research organizations, Medpace (NASDAQ:MEDP) provides outsourced clinical trial management and research services to help pharmaceutical, biotechnology, and medical device companies develop new treatments.
Why Is MEDP on Our Radar?
- Core business is healthy and doesn’t need acquisitions to boost sales as its organic revenue growth averaged 15.1% over the past two years
- Demand for the next 12 months is expected to accelerate above its two-year trend as Wall Street forecasts robust revenue growth of 18%
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
At $565 per share, Medpace trades at 35.5x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
HNI (HNI)
Trailing 12-Month GAAP Operating Margin: 9.2%
With roots dating back to 1944 and a significant acquisition of Kimball International in 2023, HNI (NYSE:HNI) manufactures and sells office furniture systems, seating, and storage solutions, as well as residential fireplaces and heating products.
Why Are We Fans of HNI?
- Operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 25.4% exceeded its revenue gains over the last two years
- Rising returns on capital show management is finding more attractive investment opportunities
HNI is trading at $41.26 per share, or 11x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free for active Edge members .
High-Quality Stocks for All Market Conditions
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 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 Comfort Systems (+782% 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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