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”.
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 is one profitable company that balances growth and profitability and two best left off your watchlist.
Two Stocks to Sell:
Ingersoll Rand (IR)
Trailing 12-Month GAAP Operating Margin: 18.1%
Started with the invention of the steam drill, Ingersoll Rand (NYSE:IR) provides mission-critical air, gas, liquid, and solid flow creation solutions.
Why Do We Think Twice About IR?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 3.2% annually
- Underwhelming 6.3% return on capital reflects management’s difficulties in finding profitable growth opportunities
Ingersoll Rand is trading at $76.06 per share, or 20.4x forward P/E. If you’re considering IR for your portfolio, see our FREE research report to learn more.
Regeneron (REGN)
Trailing 12-Month GAAP Operating Margin: 24.7%
Founded by scientists who wanted to build a company where science could thrive, Regeneron Pharmaceuticals (NASDAQ:REGN) develops and commercializes medicines for serious diseases, with key products treating eye conditions, allergic diseases, cancer, and other disorders.
Why Is REGN Not Exciting?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 4.6% over the last five years was below our standards for the healthcare sector
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 31.1 percentage points
- Diminishing returns on capital suggest its earlier profit pools are drying up
Regeneron’s stock price of $788.03 implies a valuation ratio of 13.1x forward P/E. Check out our free in-depth research report to learn more about why REGN doesn’t pass our bar.
One Stock to Buy:
Instacart (CART)
Trailing 12-Month GAAP Operating Margin: 14.8%
Powering more than one billion grocery orders since its founding, Instacart (NASDAQ:CART) is an online grocery shopping and delivery platform that partners with retailers to help customers shop from local stores through its app or website.
Why Are We Bullish on CART?
- Prominent and differentiated platform leads to a stellar gross margin of 73.6%
- Excellent EBITDA margin of 28.9% highlights the efficiency of its business model, and its operating leverage amplified its profits over the last few years
- Strong free cash flow margin of 25.9% enables it to reinvest or return capital consistently, and its recently improved profitability means it has even more resources to invest or distribute
At $43.25 per share, Instacart trades at 7.2x forward EV/EBITDA. Is now the right 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-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.