2 Profitable Stocks with Exciting Potential and 1 We Question
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”.
Profits are valuable, but they’re not everything. At StockStory, we help you identify the companies that have real staying power. Keeping that in mind, here are two profitable companies that generate reliable profits without sacrificing growth and one that may struggle to keep up.
One Stock to Sell:
BJ's (BJ)
Trailing 12-Month GAAP Operating Margin: 3.7%
Appealing to the budget-conscious individual shopping for a household, BJ’s Wholesale Club (NYSE:BJ) is a membership-only retail chain that sells groceries, appliances, electronics, and household items, often in bulk quantities.
Why Do We Think Twice About BJ?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 4% for the last three years
- Commoditized inventory, bad unit economics, and high competition are reflected in its low gross margin of 18.5%
- Subpar operating margin of 3.8% constrains its ability to invest in process improvements or effectively respond to new competitive threats
BJ’s stock price of $93.65 implies a valuation ratio of 20.1x forward P/E. If you’re considering BJ for your portfolio, see our FREE research report to learn more.
Two Stocks to Buy:
AAR (AIR)
Trailing 12-Month GAAP Operating Margin: 8.4%
The first third-party MRO approved by the FAA for Safety Management System Requirements, AAR (NYSE:AIR) is a provider of aircraft maintenance services
Why Should You Buy AIR?
- Annual revenue growth of 19.4% over the past two years was outstanding, reflecting market share gains this cycle
- Sales outlook for the upcoming 12 months implies the business will stay on its desirable two-year growth trajectory
- Earnings per share grew by 23.2% annually over the last two years, massively outpacing its peers
At $136.86 per share, AAR trades at 22.3x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Matador Resources (MTDR)
Trailing 12-Month GAAP Operating Margin: 26.4%
Operating primarily in the Delaware Basin where multiple oil-bearing layers lie stacked thousands of feet deep, Matador Resources (NYSE:MTDR) explores for, drills, and produces oil and natural gas from underground rock formations in New Mexico and Texas.
Why Is MTDR a Good Business?
- Annual revenue growth of 26.6% over the past ten years was outstanding, reflecting market share gains this cycle
- Highly-profitable operating model results in strong unit economics and a best-in-class gross margin of 81.9%
- Robust free cash flow margin of 23.2% gives it many options for capital deployment
Matador Resources is trading at $47.24 per share, or 6.5x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth 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.