2 Profitable Stocks to Own for Decades and 1 That Underwhelm
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 generate reliable profits without sacrificing growth and one best left off your watchlist.
One Stock to Sell:
First Advantage (FA)
Trailing 12-Month GAAP Operating Margin: 9.9%
Processing over 200 million screens annually across more than 200 countries and territories, First Advantage (NASDAQ:FA) provides employment background screening, identity verification, and compliance solutions to help companies manage hiring risks.
Why Are We Hesitant About FA?
- Earnings per share lagged its peers over the last four years as they only grew by 1.6% annually
- Free cash flow margin shrank by 7.9 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- 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
First Advantage is trading at $19.43 per share, or 15.6x forward P/E. Read our free research report to see why you should think twice about including FA in your portfolio.
Two Stocks to Buy:
Vertiv (VRT)
Trailing 12-Month GAAP Operating Margin: 18.3%
Formerly part of Emerson Electric, Vertiv (NYSE:VRT) manufactures and services infrastructure technology products for data centers and communication networks.
Why Is VRT a Good Business?
- Average organic revenue growth of 23.7% over the past two years demonstrates its ability to expand independently without relying on acquisitions
- Free cash flow margin expanded by 22.4 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
- Returns on capital are climbing as management makes more lucrative bets
Vertiv’s stock price of $324.75 implies a valuation ratio of 46.5x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Progressive (PGR)
Trailing 12-Month GAAP Operating Margin: 16.3%
Starting as a small auto insurance company in 1937 with a pioneering focus on high-risk drivers, Progressive (NYSE:PGR) is a major auto, property, and commercial insurance provider that offers policies through independent agents, online platforms, and over the phone.
Why Is PGR a Top Pick?
- Net premiums earned surged by 16.5% annually over the past two years, reflecting strong market share gains this cycle
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 41.6% over the last two years outstripped its revenue performance
- ROE punches in at 23.6%, illustrating management’s expertise in identifying profitable investments
At $229.76 per share, Progressive trades at 3.8x forward P/B. Is now the time to initiate a position? See for yourself 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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.