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. That said, here are two profitable companies that balance growth and profitability and one that may face some trouble.
One Stock to Sell:
RE/MAX (RMAX)
Trailing 12-Month GAAP Operating Margin: 11.8%
Short for Real Estate Maximums, RE/MAX (NYSE:RMAX) operates a real estate franchise network spanning over 100 countries and territories.
Why Are We Out on RMAX?
- Sluggish trends in its agents suggest customers aren’t adopting its solutions as quickly as the company hoped
- Earnings per share fell by 9% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 11.7% for the last two years
RE/MAX is trading at $9.85 per share, or 7.4x forward P/E. Read our free research report to see why you should think twice about including RMAX in your portfolio.
Two Stocks to Watch:
SoFi (SOFI)
Trailing 12-Month GAAP Operating Margin: 16.5%
Starting as a student loan refinancing company founded by Stanford business school students in 2011, SoFi Technologies (NASDAQ:SOFI) operates a digital financial platform offering lending, banking, investing, and other financial services to help members borrow, save, spend, invest, and protect their money.
Why Do We Love SOFI?
- Annual revenue growth of 33.4% over the past two years was outstanding, reflecting market share gains this cycle
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 396% over the last two years outstripped its revenue performance
SoFi’s stock price of $17.92 implies a valuation ratio of 28.3x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Nasdaq (NDAQ)
Trailing 12-Month GAAP Operating Margin: 45%
Originally founded in 1971 as the world's first electronic stock market, Nasdaq (NASDAQ:NDAQ) operates global exchanges and provides technology, data, and corporate services that help companies, investors, and financial institutions navigate capital markets.
Why Is NDAQ Interesting?
- Market share has increased this cycle as its 15% annual revenue growth over the last two years was exceptional
- Earnings per share grew by 14.8% annually over the last two years, above the peer group average
- ROE punches in at 15.6%, illustrating management’s expertise in identifying profitable investments
At $78.59 per share, Nasdaq trades at 19.1x forward P/E. Is now a good time to buy? Find out in our full 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 (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.