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 balance growth and profitability and one that may face some trouble.
One Stock to Sell:
ICF International (ICFI)
Trailing 12-Month GAAP Operating Margin: 7.8%
Operating at the intersection of policy, technology, and implementation for over five decades, ICF International (NASDAQ:ICFI) provides professional consulting services and technology solutions to government agencies and commercial clients across energy, health, environment, and security sectors.
Why Do We Think ICFI Will Underperform?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 4.3% annually over the last two years
- Product roadmap and go-to-market strategy need to be reconsidered as its backlog has averaged 5.7% declines over the past two years
- Earnings per share have dipped by 3.3% annually over the past two years, which is concerning because stock prices follow EPS over the long term
At $89.96 per share, ICF International trades at 11.8x forward P/E. Read our free research report to see why you should think twice about including ICFI in your portfolio.
Two Stocks to Watch:
Clean Harbors (CLH)
Trailing 12-Month GAAP Operating Margin: 11.8%
Established in 1980, Clean Harbors (NYSE:CLH) provides environmental and industrial services like hazardous and non-hazardous waste disposal and emergency spill cleanups.
Why Do We Like CLH?
- Annual revenue growth of 13.5% over the last five years was superb and indicates its market share increased during this cycle
- Share buybacks catapulted its annual earnings per share growth to 21.6%, which outperformed its revenue gains over the last five years
- Free cash flow margin expanded by 5.9 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
Clean Harbors is trading at $325.32 per share, or 31.8x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Lincoln Electric (LECO)
Trailing 12-Month GAAP Operating Margin: 17.1%
Headquartered in Ohio, Lincoln Electric (NASDAQ:LECO) manufactures and sells welding equipment for various industries.
Why Does LECO Stand Out?
- Highly efficient business model is illustrated by its impressive 16.5% operating margin, and its rise over the last five years was fueled by some leverage on its fixed costs
- Free cash flow margin jumped by 3.8 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
- Industry-leading 26.3% return on capital demonstrates management’s skill in finding high-return investments
Lincoln Electric’s stock price of $280.12 implies a valuation ratio of 23.5x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
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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.