1 Profitable Stock with Exciting Potential and 2 We Find Risky

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 is one profitable company that leverages its financial strength to beat the competition and two that may face some trouble.

Two Stocks to Sell:

Merit Medical Systems (MMSI)

Trailing 12-Month GAAP Operating Margin: 11.3%

Founded in 1987 and now offering over 1,700 patented products across global markets, Merit Medical Systems (NASDAQ:MMSI) manufactures and markets specialized medical devices used in minimally invasive procedures for cardiology, radiology, oncology, critical care, and endoscopy.

Why Does MMSI Fall Short?

1. Subscale operations are evident in its revenue base of $1.48 billion, meaning it has fewer distribution channels than its larger rivals
2. Low returns on capital reflect management’s struggle to allocate funds effectively

Merit Medical Systems’s stock price of $87.55 implies a valuation ratio of 22.3x forward P/E. To fully understand why you should be careful with MMSI, check out our full research report (it’s free for active Edge members).

Korn Ferry (KFY)

Trailing 12-Month GAAP Operating Margin: 12.7%

With clients including 97% of the S&P 100 and operations in 103 offices across 51 countries, Korn Ferry (NYSE:KFY) is a global consulting firm that helps organizations design optimal structures, recruit talent, develop leaders, and create effective compensation strategies.

Why Does KFY Worry Us?

1. Annual sales declines of 1.3% for the past two years show its products and services struggled to connect with the market during this cycle
2. Anticipated sales growth of 2.7% for the next year implies demand will be shaky
3. Diminishing returns on capital suggest its earlier profit pools are drying up

At $64.50 per share, Korn Ferry trades at 12.3x forward P/E. Check out our free in-depth research report to learn more about why KFY doesn’t pass our bar.

One Stock to Buy:

Vital Farms (VITL)

Trailing 12-Month GAAP Operating Margin: 11.2%

With an emphasis on ethically produced products, Vital Farms (NASDAQ:VITL) specializes in pasture-raised eggs and butter.

Why Will VITL Outperform?

1. Unit sales were phenomenal over the past two years, showing demand is robust and retailers can’t stock enough of its products
2. Notable projected revenue growth of 26.7% for the next 12 months hints at market share gains
3. Earnings per share have massively outperformed its peers over the last three years, increasing by 143% annually

Vital Farms is trading at $34.91 per share, or 21.5x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .

High-Quality Stocks for All Market Conditions

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

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.