3 Profitable Stocks with Competitive Advantages

Profitability is a key measure of business strength. Companies with high margins have proven they can generate consistent earnings while maintaining financial discipline.

Even among profitable businesses, only a select few truly maximize their potential - and StockStory is here to help you find them. Keeping that in mind, here are three profitable companies that balance growth and profitability.

Altria (MO)

Trailing 12-Month GAAP Operating Margin: 55.2%

Best known for its Marlboro brand of cigarettes, Altria (NYSE:MO) offers tobacco and nicotine products.

Why Are We Fans of MO?

1. Differentiated product offerings are difficult to replicate at scale and result in a best-in-class gross margin of 70.9%
2. Disciplined cost controls and effective management resulted in a strong two-year operating margin of 55%
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 $58.75 per share, Altria trades at 10.5x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.

EPAM (EPAM)

Trailing 12-Month GAAP Operating Margin: 9.6%

Founded in 1993 during the early days of offshore software development, EPAM Systems (NYSE:EPAM) provides digital engineering, cloud, and AI transformation services to help global enterprises and startups modernize their technology systems and create digital products.

Why Are We Positive On EPAM?

1. Economies of scale give it more fixed cost leverage than its smaller competitors
2. Strong free cash flow margin of 10.5% enables it to reinvest or return capital consistently
3. Industry-leading 25.5% return on capital demonstrates management’s skill in finding high-return investments

EPAM’s stock price of $211.41 implies a valuation ratio of 16.8x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.

Progressive (PGR)

Trailing 12-Month GAAP Operating Margin: 15.9%

Starting as a small auto insurance company in 1937 with a pioneering focus on high-risk drivers, Progressive (NYSE:PGR) is a major auto, property, and commercial insurance provider that offers policies through independent agents, online platforms, and over the phone.

Why Are We Bullish on PGR?

1. Net premiums earned surged by 19.5% annually over the past two years, reflecting strong market share gains this cycle
2. Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 93.9% outpaced its revenue gains
3. Annual book value per share growth of 44.7% over the last two years was superb and indicates its capital strength increased during this cycle

Progressive is trading at $222.72 per share, or 3.7x forward P/B. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.

Stocks We Like Even More

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here in 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 244% over the last five years (as of June 30, 2025).

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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today

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