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.
Profits are valuable, but they’re not everything. At StockStory, we help you identify the companies that have real staying power. 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:
Universal Technical Institute (UTI)
Trailing 12-Month GAAP Operating Margin: 10.4%
Founded in 1965, Universal Technical Institute (NYSE: UTI) is a leading provider of technical training programs, specializing in automotive, diesel, collision repair, motorcycle, and marine technicians.
Why Do We Steer Clear of UTI?
- Capital intensity will likely ramp up in the next year as its free cash flow margin is expected to contract by 4.6 percentage points
- Below-average returns on capital indicate management struggled to find compelling investment opportunities, and its shrinking returns suggest its past profit sources are losing steam
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Universal Technical Institute’s stock price of $32.85 implies a valuation ratio of 15.8x forward EV-to-EBITDA. To fully understand why you should be careful with UTI, check out our full research report (it’s free for active Edge members).
Two Stocks to Watch:
Inter Parfums (IPAR)
Trailing 12-Month GAAP Operating Margin: 18.9%
With licenses to produce colognes and perfumes under brands such as Kate Spade, Van Cleef & Arpels, and Abercrombie & Fitch, Inter Parfums (NASDAQ: IPAR) manufactures and distributes fragrances worldwide.
Why Are We Bullish on IPAR?
- Strong consumer demand for its brand drove 14.6% annual revenue growth over the last three years, outperforming sector peers
- Free cash flow margin jumped by 8.7 percentage points over the last year, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
- ROIC punches in at 27.4%, illustrating management’s expertise in identifying profitable investments
Inter Parfums is trading at $98.01 per share, or 18.3x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
AZZ (AZZ)
Trailing 12-Month GAAP Operating Margin: 15.3%
Responsible for projects like nuclear facilities, AZZ (NYSE: AZZ) is a provider of metal coating and power infrastructure solutions.
Why Could AZZ Be a Winner?
- Excellent operating margin of 15% highlights the efficiency of its business model, and it turbocharged its profits by achieving some fixed cost leverage
- Additional sales over the last two years increased its profitability as the 26% annual growth in its earnings per share outpaced its revenue
- Free cash flow margin increased by 23 percentage points over the last five years, giving the company more capital to invest or return to shareholders
At $98.55 per share, AZZ trades at 16x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at 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 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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