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. Keeping that in mind, here are two profitable companies that balance growth and profitability and one that may struggle to keep up.
One Stock to Sell:
GEO Group (GEO)
Trailing 12-Month GAAP Operating Margin: 11.2%
With a global footprint spanning three continents and approximately 81,000 beds across 100 facilities, GEO Group (NYSE: GEO) operates secure facilities, processing centers, and reentry services for government agencies in the United States, Australia, and South Africa.
Why Is GEO Not Exciting?
- 4.2% annual revenue growth over the last five years was slower than its business services peers
- Costs have risen faster than its revenue over the last five years, causing its adjusted operating margin to decline by 3.7 percentage points
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 7.4 percentage points
GEO Group’s stock price of $31.86 implies a valuation ratio of 21.6x forward P/E. Dive into our free research report to see why there are better opportunities than GEO.
Two Stocks to Buy:
Sea (SE)
Trailing 12-Month GAAP Operating Margin: 8.1%
Founded in 2009 and a publicly traded company since 2017, Sea (NYSE: SE) started as a gaming platform and has since expanded to offer a variety of services such as e-commerce, digital payments, and financial services across Southeast Asia.
Why Will SE Beat the Market?
- Has the opportunity to boost monetization through new features and premium offerings as its paying users have grown by 21.2% annually over the last two years
- Strong engagement trends coupled with 15.5% annual growth in its average revenue per user demonstrate its platform’s stickiness with die-hard customers
- Earnings per share have massively outperformed its peers over the last three years, increasing by 25.8% annually
Sea is trading at $101.40 per share, or 4.3x forward price-to-gross profit. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Kratos (KTOS)
Trailing 12-Month GAAP Operating Margin: 1.2%
Established with a commitment to supporting national security, Kratos (NASDAQ: KTOS) is a provider of advanced engineering, technology, and security solutions tailored for critical national security applications.
Why Is KTOS a Top Pick?
- Existing business lines can expand without risky acquisitions as its organic revenue growth averaged 14.9% over the past two years
- Exciting sales outlook for the upcoming 12 months calls for 30.6% growth, an acceleration from its two-year trend
- Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 18.7% annually
At $47.86 per share, Kratos trades at 52.3x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
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-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
