Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.
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 generates reliable profits without sacrificing growth and two best left off your watchlist.
Two Stocks to Sell:
Pegasystems (PEGA)
Trailing 12-Month GAAP Operating Margin: 16.5%
Founded by Alan Trefler in 1983, Pegasystems (NASDAQ: PEGA) offers a software-as-a-service platform to automate and optimize workflows in customer service and engagement.
Why Are We Hesitant About PEGA?
- Muted 8.8% annual revenue growth over the last three years shows its demand lagged behind its software peers
- Projected sales are flat for the next 12 months, implying demand will slow from its three-year trend
- Long payback periods on sales and marketing expenses limit customer growth and signal the company operates in a highly competitive environment
Pegasystems’s stock price of $99.76 implies a valuation ratio of 5.8x forward price-to-sales. If you’re considering PEGA for your portfolio, see our FREE research report to learn more.
DaVita (DVA)
Trailing 12-Month GAAP Operating Margin: 15.8%
With over 2,600 dialysis centers across the United States and a presence in 13 countries, DaVita (NYSE: DVA) operates a network of dialysis centers providing treatment and care for patients with chronic kidney disease and end-stage kidney disease.
Why Does DVA Give Us Pause?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 2.5% over the last five years was below our standards for the healthcare sector
- Flat treatments over the past two years indicate demand is soft and that the company may need to revise its strategy
- Anticipated sales growth of 4.6% for the next year implies demand will be shaky
DaVita is trading at $136.75 per share, or 11.8x forward P/E. To fully understand why you should be careful with DVA, check out our full research report (it’s free).
One Stock to Watch:
Globalstar (GSAT)
Trailing 12-Month GAAP Operating Margin: 1%
Known for powering the emergency SOS feature in newer Apple iPhones, Globalstar (NASDAQ: GSAT) operates a network of low-earth orbit satellites that provide voice and data communications services in remote areas where traditional cellular networks don't reach.
Why Does GSAT Stand Out?
- Impressive 20.7% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Additional sales over the last two years increased its profitability as the 33.7% annual growth in its earnings per share outpaced its revenue
- Robust free cash flow margin of 27.9% gives it many options for capital deployment, and its rising cash conversion increases its margin of safety
At $19.65 per share, Globalstar trades at 24x forward EV-to-EBITDA. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
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 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.
