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”.
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 best left off your watchlist.
One Stock to Sell:
Collegium Pharmaceutical (COLL)
Trailing 12-Month GAAP Operating Margin: 23.7%
Pioneering abuse-deterrent technology in a field plagued by addiction concerns, Collegium Pharmaceutical (NASDAQ: COLL) develops and markets specialty medications for treating moderate to severe pain, including abuse-deterrent opioid formulations.
Why Is COLL Not Exciting?
- Revenue base of $796.3 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Expenses have increased as a percentage of revenue over the last two years as its adjusted operating margin fell by 6.4 percentage points
- Returns on capital haven’t budged, indicating management couldn’t drive additional value creation
Collegium Pharmaceutical’s stock price of $35.89 implies a valuation ratio of 4.7x forward P/E. Dive into our free research report to see why there are better opportunities than COLL.
Two Stocks to Watch:
Ulta (ULTA)
Trailing 12-Month GAAP Operating Margin: 12.4%
Offering high-end prestige brands as well as lower-priced, mass-market ones, Ulta Beauty (NASDAQ: ULTA) is an American retailer that sells makeup, skincare, haircare, and fragrance products.
Why Are We Fans of ULTA?
- Rapid rollout of new stores to capitalize on market opportunities makes sense given its strong same-store sales performance
- Locations open for at least a year are seeing increased demand as same-store sales have averaged 3.5% growth over the past two years
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
Ulta is trading at $455.80 per share, or 15.2x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
LendingClub (HAPN)
Trailing 12-Month GAAP Operating Margin: 22.1%
Pioneering peer-to-peer lending in the US before evolving into a digital bank, Happen Bank (NYSE: HAPN) operates a marketplace that connects borrowers with lenders, offering personal loans, auto refinancing, and banking services.
What Makes HAPN Stand Out?
- Annual revenue growth of 28.7% over the last five years was superb and indicates its market share increased during this cycle
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 109% outpaced its revenue gains
- Management team has demonstrated it can invest in profitable ventures through its 11.5% five-year return on equity
At $20.38 per share, LendingClub trades at 11.6x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
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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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
