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.
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 are two profitable companies that leverage their financial strength to beat the competition and one best left off your watchlist.
One Stock to Sell:
Trex (TREX)
Trailing 12-Month GAAP Operating Margin: 20.2%
Addressing the demand for aesthetically-pleasing and unique outdoor living spaces, Trex Company (NYSE:TREX) makes wood-alternative decking, railing, and patio furniture.
Why Do We Pass on TREX?
- Sales tumbled by 1.7% annually over the last two years, showing market trends are working against it during this cycle
- 7.3 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
At $44.29 per share, Trex trades at 23.3x forward P/E. Check out our free in-depth research report to learn more about why TREX doesn’t pass our bar.
Two Stocks to Buy:
Oscar Health (OSCR)
Trailing 12-Month GAAP Operating Margin: 4.1%
Founded in 2012 to simplify the notoriously complex American healthcare system, Oscar Health (NYSE:OSCR) is a technology-focused health insurance company that offers individual and small group health plans through its cloud-native platform.
Why Should You Buy OSCR?
- Annual revenue growth of 45.5% over the past two years was outstanding, reflecting market share gains this cycle
- Earnings per share have massively outperformed its peers over the last five years, increasing by 37.4% annually
- Free cash flow margin grew by 23.8 percentage points over the last five years, giving the company more chips to play with
Oscar Health’s stock price of $33.88 implies a valuation ratio of 18.5x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
ConocoPhillips (COP)
Trailing 12-Month GAAP Operating Margin: 23.6%
Operating the famous Prudhoe Bay field discovered in 1968 that transformed Alaska's economy, ConocoPhillips (NYSE:COP) explores for and produces crude oil, natural gas, and liquefied natural gas across North America, Europe, Asia, and Africa.
Why Will COP Beat the Market?
- Impressive 10.1% annual revenue growth over the last ten years indicates it’s winning market share this cycle
- Enormous revenue base of $65.28 billion provides significant leverage in supplier negotiations
- COP is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
ConocoPhillips is trading at $142.76 per share, or 12.5x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating 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.