1 Profitable Stock with Solid Fundamentals and 2 to Steer Clear Of
Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages. Just because a business is in the green today doesn't mean it will thrive tomorrow.
Not all profitable companies are created equal, and that's why we built StockStory - to help you find the ones that truly shine bright. That said, here is one profitable company that leverages its financial strength to beat the competition and two best left off your watchlist.
Trailing 12-Month GAAP Operating Margin: 13.4%
Founded in 1999 by two engineers from MIT, Akamai (NASDAQ:AKAM) provides software for organizations to efficiently deliver web content to their customers.
Why Is AKAM Risky?
Sales trends were unexciting over the last three years as its 4.9% annual growth was well below the typical software company
Sky-high servicing costs result in an inferior gross margin of 59.4% that must be offset through increased usage
Long payback periods on sales and marketing expenses limit customer growth and signal the company operates in a highly competitive environment
Akamai's stock price of $75.22 implies a valuation ratio of 2.7x forward price-to-sales. Read our free research report to see why you should think twice about including AKAM in your portfolio, it's free.
Trailing 12-Month GAAP Operating Margin: 8.5%
Best known for its SPAM brand, Hormel (NYSE:HRL) is a packaged foods company with products that span meat, poultry, shelf-stable foods, and spreads.
Why Does HRL Fall Short?
Falling unit sales over the past two years imply it may need to invest in product improvements to get back on track
Easily substituted products (and therefore stiff competition) result in an inferior gross margin of 16.7% that must be offset through higher volumes
Sales over the last three years were less profitable as its earnings per share fell by 4.9% annually while its revenue was flat
At $30.71 per share, Hormel Foods trades at 18x forward price-to-earnings. If you're considering HRL for your portfolio, see our FREE research report to learn more.
Trailing 12-Month GAAP Operating Margin: 4.4%
Formerly known as Apollo Medical Holdings until early 2024, Astrana Health (NASDAQ:ASTH) operates a technology-powered healthcare platform that enables physicians to deliver coordinated care while successfully participating in value-based payment models.
Why Are We Positive On ASTH?
Annual revenue growth of 33.3% over the last two years was superb and indicates its market share increased during this cycle
Revenue outlook for the upcoming 12 months is outstanding and shows it's on track to gain market share
Earnings growth has trumped its peers over the last five years as its EPS has compounded at 18.7% annually
Astrana Health is trading at $31.90 per share, or 7x forward EV-to-EBITDA. Is now the right time to buy? See for yourself in our comprehensive research report, it's free.
Donald Trump's victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Axon (+711% five-year return). Find your next big winner with StockStory today for free.
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