2 Profitable Stocks for Long-Term Investors and 1 That Underwhelm
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 are two profitable companies that leverage their financial strength to beat the competition and one best left off your watchlist.
One Stock to Sell:
Northrop Grumman (NOC)
Trailing 12-Month GAAP Operating Margin: 10.7%
Responsible for the development of the first stealth bomber, Northrop Grumman (NYSE:NOC) specializes in providing aerospace, defense, and security solutions for various industry applications.
Why Should You Sell NOC?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Projected sales growth of 5.9% for the next 12 months suggests sluggish demand
- Earnings growth over the last five years fell short of the peer group average as its EPS only increased by 2.4% annually
Northrop Grumman’s stock price of $528 implies a valuation ratio of 17.9x forward P/E. Check out our free in-depth research report to learn more about why NOC doesn’t pass our bar.
Two Stocks to Buy:
ServiceNow (NOW)
Trailing 12-Month GAAP Operating Margin: 11.4%
Built on a single code base that processes more than 80 billion workflows and 6.5 trillion transactions annually, ServiceNow (NYSE:NOW) provides a cloud-based platform that helps organizations automate and digitize workflows across departments, from IT and HR to customer service and security.
Why Should You Buy NOW?
- Ability to secure long-term commitments with customers is evident in its 22.3% ARR growth over the last year
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
ServiceNow is trading at $145.33 per share, or 8x forward price-to-sales. Is now the right time to buy? See for yourself in our full research report, it’s free.
ESCO (ESE)
Trailing 12-Month GAAP Operating Margin: 15.7%
A developer of the communication systems used in the Batmobile of “The Dark Knight,” ESCO (NYSE:ESE) is a provider of engineered components for the aerospace, defense, and utility sectors.
Why Is ESE a Good Business?
- Annual revenue growth of 15.1% over the last two years was superb and indicates its market share increased during this cycle
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 42.6% outpaced its revenue gains
- Free cash flow margin expanded by 9.3 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
At $278.35 per share, ESCO trades at 29.9x 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
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 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.