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".
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 struggle to keep up.
One Stock to Sell:
CNO Financial Group (CNO)
Trailing 12-Month GAAP Operating Margin: 15.2%
Rebranded from Conseco in 2010 to signal a fresh start after navigating financial challenges, CNO Financial Group (NYSE: CNO) develops and markets health insurance, annuities, and life insurance products primarily targeting middle-income pre-retirees and retirees.
Why Are We Hesitant About CNO?
- Net premiums earned stagnated over the last four years and signal the need for new growth strategies
- Expenses have increased as a percentage of revenue over the last four years as its pre-tax profit margin fell by 6.7 percentage points
- Products and services are facing profitability challenges during this cycle, as seen in its flat book value per share over the last five years
At $38.18 per share, CNO Financial Group trades at 1.5x forward P/B. Dive into our free research report to see why there are better opportunities than CNO.
Two Stocks to Watch:
Copart (CPRT)
Trailing 12-Month GAAP Operating Margin: 35.8%
Starting as a single salvage yard in California in 1982, Copart (NASDAQ: CPRT) operates an online auction platform that connects sellers of damaged and salvage vehicles with buyers ranging from dismantlers and rebuilders to used car dealers and exporters.
Why Will CPRT Outperform?
- Annual revenue growth of 15.6% over the past five years was outstanding, reflecting market share gains this cycle
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 19.6% over the last five years outstripped its revenue performance
- CPRT is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its recently improved profitability means it has even more resources to invest or distribute
Copart’s stock price of $48 implies a valuation ratio of 27.8x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
Griffon (GFF)
Trailing 12-Month GAAP Operating Margin: 17.3%
Initially in the defense industry, Griffon (NYSE: GFF) is a now diversified company specializing in home improvement, professional equipment, and building products.
Why Do We Like GFF?
- Operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
- Additional sales over the last five years increased its profitability as the 32.6% annual growth in its earnings per share outpaced its revenue
- Free cash flow margin increased by 10 percentage points over the last five years, giving the company more capital to invest or return to shareholders
Griffon is trading at $70.73 per share, or 11.8x 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
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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
