Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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. Keeping that in mind, here are two profitable companies that balance growth and profitability and one best left off your watchlist.
One Stock to Sell:
BJ's (BJ)
Trailing 12-Month GAAP Operating Margin: 3.9%
Appealing to the budget-conscious individual shopping for a household, BJ’s Wholesale Club (NYSE: BJ) is a membership-only retail chain that sells groceries, appliances, electronics, and household items, often in bulk quantities.
Why Are We Cautious About BJ?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Widely-available products (and therefore stiff competition) result in an inferior gross margin of 18.5% that must be offset through higher volumes
- Subpar operating margin of 3.9% constrains its ability to invest in process improvements or effectively respond to new competitive threats
At $96.17 per share, BJ's trades at 21.8x forward P/E. Check out our free in-depth research report to learn more about why BJ doesn’t pass our bar.
Two Stocks to Buy:
Monolithic Power Systems (MPWR)
Trailing 12-Month GAAP Operating Margin: 26.1%
Founded in 1997 by its longtime CEO Michael Hsing, Monolithic Power Systems (NASDAQ: MPWR) is an analog and mixed signal chipmaker that specializes in power management chips meant to minimize total energy consumption.
Why Should You Buy MPWR?
- Impressive 27% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 28.7% over the last five years outstripped its revenue performance
- Free cash flow margin jumped by 8 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Monolithic Power Systems is trading at $1,214 per share, or 55.3x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Super Micro (SMCI)
Trailing 12-Month GAAP Operating Margin: 3.7%
Founded in Silicon Valley in 1993 and known for its modular "building block" approach to server design, Super Micro Computer (NASDAQ: SMCI) designs and manufactures high-performance, energy-efficient server and storage systems for data centers, cloud computing, AI, and edge computing applications.
Why Do We Love SMCI?
- Impressive 74.1% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Earnings per share have massively outperformed its peers over the last five years, increasing by 45.5% annually
- Free cash flow profile has moved into positive territory over the last five years, showing the company has crossed a key inflection point
Super Micro’s stock price of $31.07 implies a valuation ratio of 12.6x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. 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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
