2 Profitable Stocks on Our Watchlist and 1 We Find Risky
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 that may face some trouble.
One Stock to Sell:
Fortive (FTV)
Trailing 12-Month GAAP Operating Margin: 18.2%
Taking its name from the Latin root of "strong", Fortive (NYSE:FTV) manufactures products and develops industrial software for numerous industries.
Why Are We Out on FTV?
- Annual sales declines of 3.1% for the past five years show its products and services struggled to connect with the market during this cycle
- Earnings per share have contracted by 8.3% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
- Low returns on capital reflect management’s struggle to allocate funds effectively
Fortive is trading at $55.76 per share, or 18x forward P/E. To fully understand why you should be careful with FTV, check out our full research report (it’s free).
Two Stocks to Watch:
Toast (TOST)
Trailing 12-Month GAAP Operating Margin: 6.3%
Born from the frustrations of three friends waiting too long for their restaurant bill, Toast (NYSE:TOST) provides a cloud-based digital technology platform with software, payment processing, and hardware solutions built specifically for restaurants.
Why Are We Fans of TOST?
- ARR trends over the last year show it’s maintaining a steady flow of long-term contracts that contribute positively to its revenue predictability
- Sales outlook for the upcoming 12 months implies the business will stay on its desirable two-year growth trajectory
At $30.57 per share, Toast trades at 2.2x forward price-to-sales. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Novanta (NOVT)
Trailing 12-Month GAAP Operating Margin: 11.6%
Originally a pioneer in the laser scanning industry during the late 1960s, Novanta (NASDAQ:NOVT) offers medicine and manufacturing technology to the medical, life sciences, and manufacturing industries.
Why Does NOVT Catch Our Eye?
- Market share has increased this cycle as its 10.7% annual revenue growth over the last five years was exceptional
- Exciting sales outlook for the upcoming 12 months calls for 20.5% growth, an acceleration from its two-year trend
- Offerings are difficult to replicate at scale and result in a premier gross margin of 44.4%
Novanta’s stock price of $141.52 implies a valuation ratio of 36.1x 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 Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.