2 profitable stocks with competitive advantages 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 balance growth and profitability and one that may face some trouble.
One industrials stock to sell:
Landstar (LSTR)
Trailing 12-month GAAP operating margin: 4%
Covering billions of miles throughout North America, Landstar (NASDAQ:LSTR) is a transportation company specializing in freight and last-mile delivery services.
Why Do We Think LSTR Will Underperform?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 2.1% annually over the last five years
- Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
- Diminishing returns on capital suggest its earlier profit pools are drying up
Landstar is trading at $139.53 per share, or 23.9x forward P/E. Dive into our free research report to see why there are better opportunities than LSTR.
Two industrials stocks to watch:
FTAI Infrastructure (FIP)
Trailing 12-month GAAP operating margin: 9.5%
Spun off from FTAI Aviation in 2021, FTAI Infrastructure (NASDAQ:FIP) invests in and operates infrastructure and related assets across the transportation and energy sectors.
Why Does FIP Stand Out?
- Market share has increased this cycle as its 41.4% annual revenue growth over the last two years was exceptional
- Expected revenue growth of 17.4% for the next year suggests its market share will rise
- Gross margin of 30.1% is reasonable for the industry and allows for steady investments in marketing and R&D
At $2.82 per share, FTAI Infrastructure trades at 8.2x forward EV-to-EBITDA. Is now the right time to buy? See for yourself in our full research report, it’s free.
Leidos (LDOS)
Trailing 12-month GAAP operating margin: 11.5%
Formed through the split of IT services company SAIC, Leidos (NYSE:LDOS) offers technology and engineering solutions such as military training systems for the defense, civil, and health markets.
Why Are We Positive on LDOS?
- Average backlog growth of 15.9% over the past two years shows it has a steady sales pipeline that will drive future orders
- Share buybacks catapulted its annual earnings per share growth to 16.8%, which outperformed its revenue gains over the last two years
- Free cash flow margin increased by 6.5 percentage points over the last five years, giving the company more capital to invest or return to shareholders
Leidos’s stock price of $138.75 implies a valuation ratio of 11.5x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
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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.