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 is one profitable company that balances growth and profitability and two best left off your watchlist.
Two Stocks to Sell:
Covista (CVSA)
Trailing 12-Month GAAP Operating Margin: 19.1%
Formerly known as DeVry Education Group, Covista (NYSE: CVSA) is a global provider of workforce solutions and educational services.
Why Do We Think CVSA Will Underperform?
- Sales trends were unexciting over the last five years as its 15.2% annual growth was below the typical consumer discretionary company
- Capital intensity will likely ramp up in the next year as its free cash flow margin is expected to contract by 3.8 percentage points
- Underwhelming 9% return on capital reflects management’s difficulties in finding profitable growth opportunities
Covista is trading at $133.16 per share, or 15.4x forward P/E. If you’re considering CVSA for your portfolio, see our FREE research report to learn more.
Matson (MATX)
Trailing 12-Month GAAP Operating Margin: 13.8%
Founded by a Swedish orphan, Matson (NYSE: MATX) is a provider of ocean transportation and logistics services.
Why Is MATX Not Exciting?
- Annual revenue growth of 3.3% over the last two years was below our standards for the industrials sector
- Free cash flow margin shrank by 13.2 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Diminishing returns on capital suggest its earlier profit pools are drying up
At $205.16 per share, Matson trades at 13.9x forward P/E. Dive into our free research report to see why there are better opportunities than MATX.
One Stock to Buy:
KLA Corporation (KLAC)
Trailing 12-Month GAAP Operating Margin: 41.7%
Formed by the 1997 merger of the two leading semiconductor yield management companies, KLA Corporation (NASDAQ: KLAC) is the leading supplier of equipment used to measure and inspect semiconductor chips.
What Makes KLAC Stand Out?
- Annual revenue growth of 15.2% over the past five years was outstanding, reflecting market share gains this cycle
- Excellent operating margin of 40% highlights the efficiency of its business model, and its profits increased over the last five years as it scaled
- Robust free cash flow margin of 30.5% gives it many options for capital deployment
KLA Corporation’s stock price of $221.38 implies a valuation ratio of 48.2x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
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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.
