Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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. Keeping that in mind, here is one profitable company that balances growth and profitability and two that may face some trouble.
Two Stocks to Sell:
Amkor (AMKR)
Trailing 12-Month GAAP Operating Margin: 8.6%
Operating through a largely Asian facility footprint, Amkor Technologies (NASDAQ: AMKR) provides outsourced packaging and testing for semiconductors.
Why Do We Pass on AMKR?
- Sales trends were unexciting over the last two years as its 7.9% annual growth was below the typical semiconductor company
- Gross margin of 14.6% is below its competitors, leaving less money to invest in areas like marketing and R&D
- Weak free cash flow margin of 0.8% has deteriorated further over the last five years as its investments increased
At $53.04 per share, Amkor trades at 19.1x forward P/E. Read our free research report to see why you should think twice about including AMKR in your portfolio.
Laureate Education (LAUR)
Trailing 12-Month GAAP Operating Margin: 24.4%
Founded in 1998 by Douglas L. Becker and based in Miami, Laureate Education (NASDAQ: LAUR) is a global network of higher education institutions.
Why Do We Avoid LAUR?
- Demand for its offerings was relatively low as its number of enrolled students has underwhelmed
- Capital intensity will likely increase as its free cash flow margin is anticipated to drop by 1.7 percentage points over the next year
- Low returns on capital reflect management’s struggle to allocate funds effectively
Laureate Education is trading at $38.01 per share, or 17.1x forward P/E. Dive into our free research report to see why there are better opportunities than LAUR.
One Stock to Buy:
Lam Research (LRCX)
Trailing 12-Month GAAP Operating Margin: 35.3%
Founded in 1980 by David Lam, the man who pioneered semiconductor etching technology, Lam Research (NASDAQ: LRCX) is one of the leading providers of wafer fabrication equipment used to make semiconductors.
Why Is LRCX a Top Pick?
- Impressive 24.8% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Highly efficient business model is illustrated by its impressive 33.8% operating margin, and its rise over the last five years was fueled by some leverage on its fixed costs
- ROIC punches in at 64.2%, illustrating management’s expertise in identifying profitable investments, and its returns are growing as it capitalizes on even better market opportunities
Lam Research’s stock price of $341.54 implies a valuation ratio of 34.7x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
