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 leverage their financial strength to beat the competition and one best left off your watchlist.
One Stock to Sell:
Verisk (VRSK)
Trailing 12-Month GAAP Operating Margin: 44%
Processing over 2.8 billion insurance transaction records annually through one of the world's largest private databases, Verisk Analytics (NASDAQ:VRSK) provides data, analytics, and technology solutions that help insurance companies assess risk, detect fraud, and make better business decisions.
Why Do We Think Twice About VRSK?
- 1.9% annual revenue growth over the last five years was slower than its business services peers
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 9.3% annually
At $178.65 per share, Verisk trades at 22.7x forward P/E. To fully understand why you should be careful with VRSK, check out our full research report (it’s free).
Two Stocks to Watch:
CarGurus (CARG)
Trailing 12-Month GAAP Operating Margin: 24.9%
Bringing transparency to a sometimes opaque process, CarGurus (NASDAQ:CARG) is a digital marketplace where auto dealers can connect with potential customers and where car buyers can browse, purchase, and obtain financing.
Why Could CARG Be a Winner?
- Prominent and differentiated platform results in a best-in-class gross margin of 88.4%
- Earnings per share grew by 32.5% annually over the last three years, massively outpacing its peers
- Strong free cash flow margin of 26.5% enables it to reinvest or return capital consistently, and its expanding margin gives it even more flexibility
CarGurus’s stock price of $27.17 implies a valuation ratio of 7.9x forward EV/EBITDA. Is now the right time to buy? See for yourself in our full research report, it’s free.
Jack Henry (JKHY)
Trailing 12-Month GAAP Operating Margin: 26.6%
Founded in 1976 by two entrepreneurs who saw the need for specialized banking software in the early days of financial computing, Jack Henry & Associates (NASDAQ:JKHY) provides technology solutions that help banks and credit unions innovate, differentiate, and compete while serving the evolving needs of their accountholders.
Why Do We Love JKHY?
- Products and services resonate with customers, evidenced by its respectable 7.7% annualized sales growth over the last five years
- Performance over the past two years was boosted by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Stellar return on equity showcases management’s ability to surface highly profitable business ventures
Jack Henry is trading at $129.88 per share, or 19x 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
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 (+1,326% 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.