1 Profitable Stock on Our Buy List and 2 Facing Headwinds

Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.

Not all profitable companies are created equal, and that’s why we built StockStory - to help you find the ones that truly shine bright. Keeping that in mind, here is one profitable company that generates reliable profits without sacrificing growth and two that may struggle to keep up.

Two Stocks to Sell:

Burlington (BURL)

Trailing 12-Month GAAP Operating Margin: 7.1%

Founded in 1972 as a discount coat and outerwear retailer, Burlington Stores (NYSE:BURL) is now an off-price retailer that has broadened into general apparel, footwear, and home goods.

Why Does BURL Fall Short?

1. Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 8% over the last six years was below our standards for the consumer retail sector
2. 7.5 percentage point decline in its free cash flow margin over the last year reflects the company’s increased investments to defend its market position
3. Below-average returns on capital indicate management struggled to find compelling investment opportunities

At $280.22 per share, Burlington trades at 29.3x forward P/E. To fully understand why you should be careful with BURL, check out our full research report (it’s free).

XPO (XPO)

Trailing 12-Month GAAP Operating Margin: 8.4%

Owning a mobile game simulating freight operations for the Tour de France, XPO (NYSE:XPO) is a transportation company specializing in expedited shipping services.

Why Do We Pass on XPO?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 6.5% annually over the last five years
2. Flat earnings per share over the last two years lagged its peers
3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 7.2 percentage points

XPO’s stock price of $127.40 implies a valuation ratio of 31.3x forward P/E. If you’re considering XPO for your portfolio, see our FREE research report to learn more.

One Stock to Buy:

Nova (NVMI)

Trailing 12-Month GAAP Operating Margin: 28.9%

Headquartered in Israel, Nova (NASDAQ:NVMI) is a provider of quality control systems used in semiconductor manufacturing.

Why Are We Bullish on NVMI?

1. Annual revenue growth of 21.1% over the past two years was outstanding, reflecting market share gains this cycle
2. Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
3. Stellar returns on capital showcase management’s ability to surface highly profitable business ventures

Nova is trading at $257.07 per share, or 29.2x 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

Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today

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