2 Profitable Stocks to Research Further and 1 That Underwhelm

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 generate reliable profits without sacrificing growth and one that may face some trouble.

One Stock to Sell:

Brookdale (BKD)

Trailing 12-Month GAAP Operating Margin: 3.6%

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 Is BKD Not Exciting?

1. Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last five years
2. Sales are projected to tank by 4.4% over the next 12 months as demand evaporates
3. High net-debt-to-EBITDA ratio of 11× could force the company to raise capital on unfavorable terms if market conditions deteriorate

At $12.87 per share, Brookdale trades at 15.9x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why BKD doesn’t pass our bar.

Two Stocks to Watch:

Western Digital (WDC)

Trailing 12-Month GAAP Operating Margin: 30.3%

Founded in 1970 by a Motorola employee, Western Digital (NASDAQ: WDC) is a leading producer of hard disk drives, SSDs and flash memory.

Why Are We Fans of WDC?

1. Sales outlook for the upcoming 12 months calls for 40.2% growth, an acceleration from its two-year trend
2. Operating margin improved by 17.3 percentage points over the last five years as it eliminated redundant costs
3. Free cash flow margin expanded by 17.1 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends

Western Digital’s stock price of $529.15 implies a valuation ratio of 34.2x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.

CNX Resources (CNX)

Trailing 12-Month GAAP Operating Margin: 84%

Tracing back to operations that began in 1860, CNX Resources (NYSE:CNX) drills for and produces natural gas from underground shale formations in Pennsylvania, Ohio, and West Virginia.

Why Do We Like CNX?

1. Highly-profitable operating model results in strong unit economics and a premier gross margin of 68%
2. EBITDA profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
3. CNX is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders

CNX Resources is trading at $33.91 per share, or 12.2x 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

ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.

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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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.