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2 Profitable Stocks with Competitive Advantages and 1 That Underwhelm
Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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. That said, here are two profitable companies that balance growth and profitability and one that may struggle to keep up.
One Industrials Stock to Sell:
Republic Services (RSG)
Trailing 12-Month GAAP Operating Margin: 19.9%
Processing several million tons of recyclables annually, Republic (NYSE:RSG) provides waste management services for residences, companies, and municipalities.
Why Are We Wary of RSG?
- Annual sales growth of 4.2% over the last two years lagged behind its industrials peers as its large revenue base made it difficult to generate incremental demand
- Flat unit sales over the past two years suggest it might have to lower prices to accelerate growth
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 4.8%
Republic Services is trading at $215.00 per share, or 28.2x forward P/E. Check out our free in-depth research report to learn more about why RSG doesn’t pass our bar.
Two Industrials Stocks to Watch:
Rollins (ROL)
Trailing 12-Month GAAP Operating Margin: 18.7%
Operating under multiple brands like Orkin and HomeTeam Pest Defense, Rollins (NYSE:ROL) provides pest and wildlife control services to residential and commercial customers.
Why Is ROL Interesting?
- Market share has increased this cycle as its 11.3% annual revenue growth over the last five years was exceptional
- Offerings are mission-critical for businesses and result in a best-in-class gross margin of 52.2%
- Robust free cash flow margin of 16.1% gives it many options for capital deployment, and its improved cash conversion implies it’s becoming a less capital-intensive business
Rollins’s stock price of $36.47 implies a valuation ratio of 29.7x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Karat Packaging (KRT)
Trailing 12-Month GAAP Operating Margin: 12.8%
Founded as Lollicup, Karat Packaging (NASDAQ: KRT) distributes and manufactures environmentally-friendly disposable foodservice packaging solutions.
What Makes KRT Stand Out?
- Offerings and unique value proposition resonate with customers, as seen in its above-market 9.8% annual sales growth over the last two years
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 25.7% over the last two years outstripped its revenue performance
- Free cash flow margin jumped by 13.8 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
At $48.29 per share, Karat Packaging trades at 25.3x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
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-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.