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. That said, 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:
UFP Technologies (UFPT)
Trailing 12-Month GAAP Operating Margin: 15.2%
With expertise dating back to 1963 in specialized materials and precision manufacturing, UFP Technologies (NASDAQ:UFPT) designs and manufactures custom solutions for medical devices, sterile packaging, and other highly engineered products for healthcare and industrial applications.
Why Are We Hesitant About UFPT?
- Subscale operations are evident in its revenue base of $631.6 million, meaning it has fewer distribution channels than its larger rivals
- Static adjusted operating margin over the last two years shows it couldn’t become more efficient
UFP Technologies’s stock price of $309.25 implies a valuation ratio of 28x forward P/E. Read our free research report to see why you should think twice about including UFPT in your portfolio.
Two Stocks to Buy:
Bel Fuse (BELFA)
Trailing 12-Month GAAP Operating Margin: 15.9%
Founded by 26-year-old Elliot Bernstein during the electronics boom after WW2, Bel Fuse (NASDAQ:BELF.A) provides electronic systems and devices to the telecommunications, networking, transportation, and industrial sectors.
Why Will BELFA Outperform?
- Annual revenue growth of 15.3% over the last two years was superb and indicates its market share increased during this cycle
- Additional sales over the last two years increased its profitability as the 27.1% annual growth in its earnings per share outpaced its revenue
- Free cash flow margin expanded by 8.7 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
At $213.98 per share, Bel Fuse trades at 28.5x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
EXL (EXLS)
Trailing 12-Month GAAP Operating Margin: 14.9%
Originally founded as an outsourcing company in 1999 before evolving into a technology-focused enterprise, EXL (NASDAQ:EXLS) provides data analytics and AI-powered digital operations solutions that help businesses transform their operations and make better decisions.
Why Is EXLS a Good Business?
- Market share has increased this cycle as its 16.9% annual revenue growth over the last five years was exceptional
- Market share will likely rise over the next 12 months as its expected revenue growth of 14.3% is robust
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 19% exceeded its revenue gains over the last five years
EXL is trading at $37.45 per share, or 15.6x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
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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-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.