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 are two profitable companies that leverage their financial strength to beat the competition and one that may struggle to keep up.
One Stock to Sell:
Kodiak Gas Services (KGS)
Trailing 12-Month GAAP Operating Margin: 26%
Dominating the Permian Basin with a fleet focused on large horsepower units exceeding 1,000 horsepower each, Kodiak Gas Services (NYSE: KGS) operates compression equipment that maintains natural gas pressure for production, gathering, and transportation.
Why Does KGS Fall Short?
- Modest revenue base of $1.31 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- Efficiency has decreased over the last five years as its EBITDA margin fell by 4.9 percentage points
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
Kodiak Gas Services’s stock price of $66.81 implies a valuation ratio of 24.9x forward P/E. Check out our free in-depth research report to learn more about why KGS doesn’t pass our bar.
Two Stocks to Buy:
CECO Environmental (CECO)
Trailing 12-Month GAAP Operating Margin: 5.7%
With roots dating back to 1869 and a focus on creating cleaner industrial operations, CECO Environmental (NASDAQ: CECO) provides technology and expertise that helps industrial companies reduce emissions, treat water, and improve energy efficiency across various sectors.
Why Is CECO a Good Business?
- Impressive 19.9% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Projected revenue growth of 23.9% for the next 12 months is above its two-year trend, pointing to accelerating demand
- Share repurchases over the last two years enabled its annual earnings per share growth of 23.6% to outpace its revenue gains
CECO Environmental is trading at $71.49 per share, or 43.8x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
CBIZ (CBZ)
Trailing 12-Month GAAP Operating Margin: 10.9%
With over 120 offices across 33 states and a team of more than 6,700 professionals, CBIZ (NYSE: CBZ) provides accounting, tax, benefits, insurance brokerage, and advisory services to help small and mid-sized businesses manage their finances and operations.
Why Do We Love CBZ?
- Annual revenue growth of 30.3% over the last two years was superb and indicates its market share increased during this cycle
- Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 22.9% annually
- Able to self-fund growth initiatives without relying on external capital thanks to its 7% free cash flow margin, and its improved cash conversion implies it’s becoming a less capital-intensive business
At $34.15 per share, CBIZ trades at 8x forward P/E. Is now a good time to buy? 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 (+1,326% 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.
