2 Profitable Stocks with Competitive Advantages and 1 We Question

Even if a company is profitable, it doesn’t always mean it’s a great investment. Some struggle to maintain growth, face looming threats, or fail to reinvest wisely, limiting their future potential.

A business making money today isn’t necessarily a winner, which is why we analyze companies across multiple dimensions at StockStory. Keeping that in mind, here are two profitable companies that balance growth and profitability and one best left off your watchlist.

One Stock to Sell:

Zurn Elkay (ZWS)

Trailing 12-Month GAAP Operating Margin: 16.1%

Claiming to have saved more than 30 billion gallons of water, Zurn Elkay (NYSE:ZWS) provides water management solutions to various industries.

Why Do We Avoid ZWS?

1. Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
2. Earnings per share decreased by more than its revenue over the last five years, partly because it diluted shareholders
3. Free cash flow margin dropped by 5.5 percentage points over the last five years, implying the company became more capital intensive as competition picked up

Zurn Elkay’s stock price of $45.68 implies a valuation ratio of 30.9x forward P/E. Check out our free in-depth research report to learn more about why ZWS doesn’t pass our bar.

Two Stocks to Watch:

Globalstar (GSAT)

Trailing 12-Month GAAP Operating Margin: 3.9%

Known for powering the emergency SOS feature in newer Apple iPhones, Globalstar (NASDAQ:GSAT) operates a network of low-earth orbit satellites that provide voice and data communications services in remote areas where traditional cellular networks don't reach.

Why Could GSAT Be a Winner?

1. Market share has increased this cycle as its 16.3% annual revenue growth over the last two years was exceptional
2. Incremental sales significantly boosted profitability as its annual earnings per share growth of 55.5% over the last two years outstripped its revenue performance
3. Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its rising cash conversion increases its margin of safety

At $43.65 per share, Globalstar trades at 38.6x forward EV-to-EBITDA. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.

Piper Sandler (PIPR)

Trailing 12-Month GAAP Operating Margin: 13.5%

Tracing its roots back to 1895 and rebranded from Piper Jaffray in 2020, Piper Sandler (NYSE:PIPR) is an investment bank that provides advisory services, capital raising, institutional brokerage, and research for corporations, governments, and institutional investors.

Why Will PIPR Outperform?

1. Incremental sales over the last two years have been highly profitable as its earnings per share increased by 25.6% annually, topping its revenue gains
2. Annual tangible book value per share growth of 13.2% over the last five years was superb and indicates its capital strength increased during this cycle
3. Industry-leading 14.3% return on equity demonstrates management’s skill in finding high-return investments

Piper Sandler is trading at $326.14 per share, or 21.3x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.

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 5 Strong Momentum Stocks for this week. 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-micro-cap company Kadant (+351% 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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