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".
Profits are valuable, but they’re not everything. At StockStory, we help you identify the companies that have real staying power. That said, here are two profitable companies that balance growth and profitability and one that may face some trouble.
One Stock to Sell:
Pangaea (PANL)
Trailing 12-Month GAAP Operating Margin: 6.7%
Established in 1996, Pangaea Logistics (NASDAQ: PANL) specializes in global logistics and transportation services, focusing on the shipment of dry bulk cargoes.
Why Does PANL Fall Short?
- Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 5.4 percentage points
- Falling earnings per share over the last four years has some investors worried as stock prices ultimately follow EPS over the long term
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
Pangaea is trading at $8.02 per share, or 0.8x trailing 12-month price-to-sales. Dive into our free research report to see why there are better opportunities than PANL.
Two Stocks to Buy:
Guidewire Software (GWRE)
Trailing 12-Month GAAP Operating Margin: 6.8%
With its systems powering the operations of hundreds of insurance brands across 42 countries, Guidewire Software (NYSE: GWRE) provides a technology platform that helps property and casualty insurance companies manage their core operations, digital engagement, and analytics.
Why Will GWRE Outperform?
- Winning new contracts that can potentially increase in value as its billings growth has averaged 21.1% over the last year
- Software platform has product-market fit given the rapid recovery of its customer acquisition costs
- Has the option to reinvest or return capital to investors as its 21.9% free cash flow margin is well above its peers
At $140.00 per share, Guidewire Software trades at 7.6x forward price-to-sales. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Armstrong World (AWI)
Trailing 12-Month GAAP Operating Margin: 25.9%
Started as a two-man shop dating back to the 1860s, Armstrong (NYSE: AWI) provides ceiling and wall products to commercial and residential spaces.
Why Is AWI a Good Business?
- Annual revenue growth of 12.1% over the past two years was outstanding, reflecting market share gains this cycle
- Highly efficient business model is illustrated by its impressive 24.9% operating margin, and it turbocharged its profits by achieving some fixed cost leverage
- Free cash flow margin expanded by 5.2 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
Armstrong World’s stock price of $152.85 implies a valuation ratio of 18.3x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don't just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
