Even if a company is profitable, it doesn’t always mean it’s a great investment. Some struggle to maintain growth, face looming threats, or fail to reinvest wisely, limiting their future potential.
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 leverage their financial strength to beat the competition and one that may face some trouble.
One Stock to Sell:
Brookdale (BKD)
Trailing 12-Month GAAP Operating Margin: 6.1%
With a network of over 650 communities serving approximately 59,000 residents across 41 states, Brookdale Senior Living (NYSE:BKD) operates senior living communities across the United States, offering independent living, assisted living, memory care, and continuing care retirement communities.
Why Do We Think Twice About BKD?
- Sales stagnated over the last five years and signal the need for new growth strategies
- Sales are projected to tank by 3.7% over the next 12 months as demand evaporates further
- 11× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Brookdale’s stock price of $12.63 implies a valuation ratio of 15.2x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than BKD.
Two Stocks to Watch:
Meta (META)
Trailing 12-Month GAAP Operating Margin: 38.1%
Famously founded by Mark Zuckerberg in his Harvard dorm, Meta Platforms (NASDAQ:META) operates a collection of the largest social networks in the world - Facebook, Instagram, WhatsApp, and Messenger, along with its metaverse focused Reality Labs.
Why Will META Outperform?
- 24.4% annual increases in its average revenue per user over the last two years show its platform is resonating with power users
- Disciplined cost controls and effective management resulted in a strong two-year EBITDA margin of 61.4%, and its rise over the last few years was fueled by some leverage on its fixed costs
- Share buybacks catapulted its annual earnings per share growth to 51.1%, which outperformed its revenue gains over the last three years
Meta is trading at $593.84 per share, or 9.5x forward EV/EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.
CarGurus (CARG)
Trailing 12-Month GAAP Operating Margin: 24.4%
Bringing transparency to a sometimes opaque process, CarGurus (NASDAQ:CARG) is a digital marketplace where auto dealers can connect with potential customers and where car buyers can browse, purchase, and obtain financing.
Why Do We Like CARG?
- Superior platform functionality and low servicing costs result in a best-in-class gross margin of 90.1%
- Earnings per share grew by 35.5% annually over the last three years and trumped its peers
- Robust free cash flow margin of 28.6% gives it many options for capital deployment, and its recently improved profitability means it’s becoming even less capital-intensive
At $38.03 per share, CarGurus trades at 9.5x forward EV/EBITDA. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
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-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.