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 is one profitable company that leverages its financial strength to beat the competition and two that may struggle to keep up.

Two Stocks to Sell:

Zimmer Biomet (ZBH)

Trailing 12-Month GAAP Operating Margin: 17%

With a history dating back to 1927 and a presence in over 100 countries worldwide, Zimmer Biomet (NYSE: ZBH) designs and manufactures orthopedic products including knee and hip replacements, surgical tools, and robotic technologies for joint reconstruction and spine surgeries.

Why Are We Hesitant About ZBH?

1. Flat sales over the last five years suggest it must find different ways to grow during this cycle
2. Weak constant currency growth over the past two years indicates challenges in maintaining its market share
3. Low returns on capital reflect management’s struggle to allocate funds effectively

At $93.67 per share, Zimmer Biomet trades at 11.3x forward P/E. If you’re considering ZBH for your portfolio, see our FREE research report to learn more.

CoreCivic (CXW)

Trailing 12-Month GAAP Operating Margin: 9.1%

Originally founded in 1983 as the first private prison company in the United States, CoreCivic (NYSE: CXW) operates correctional facilities, detention centers, and residential reentry programs for government agencies across the United States.

Why Should You Dump CXW?

1. Sluggish trends in its average available beds suggest customers aren’t adopting its solutions as quickly as the company hoped
2. Falling earnings per share over the last three years has some investors worried as stock prices ultimately follow EPS over the long term
3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 10.2 percentage points

CoreCivic’s stock price of $21.68 implies a valuation ratio of 24.3x forward P/E. Dive into our free research report to see why there are better opportunities than CXW.

One Stock to Buy:

Microsoft (MSFT)

Trailing 12-Month GAAP Operating Margin: 45.2%

Short for microcomputer software, Microsoft (NASDAQ: MSFT) is the largest software vendor in the world with its Windows operating system, Office suite, and cloud computing services.

Why Do We Love MSFT?

1. Microsoft is one of the great brands not just in tech but all of business. It produces mission-critical software and bundles it together, resulting in cream-of-the-crop gross margins.
2. The company's elite unit economics lead to robust profit margins that improve over time. This speaks to the scale advantages and operating efficiency across its diverse portfolio, which spans everything from Office and Azure to Minecraft.
3. Microsoft has a virtuous cycle of returns. Its dominant market position enables it to generate strong free cash flow, and it reinvests these funds into promising ventures that further strengthen its competitive moat.

Microsoft is trading at $497.52 per share, or 35.1x forward price-to-earnings. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.

High-Quality Stocks for All Market Conditions

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. 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-small-cap company Comfort Systems (+782% 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