2 Profitable Stocks on Our Watchlist and 1 We Avoid

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".

Profits are valuable, but they’re not everything. At StockStory, we help you identify the companies that have real staying power. That said, here are two profitable companies that generate reliable profits without sacrificing growth and one best left off your watchlist.

One Stock to Sell:

Carnival (CCL)

Trailing 12-Month GAAP Operating Margin: 16.8%

Boasting outrageous amenities like a planetarium on board its ships, Carnival (NYSE:CCL) is one of the world's largest leisure travel companies and a prominent player in the cruise industry.

Why Is CCL Risky?

1. Demand for its offerings was relatively low as its number of passenger cruise days has underwhelmed
2. Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
3. Negative returns on capital show management lost money while trying to expand the business

Carnival’s stock price of $25.76 implies a valuation ratio of 10.8x forward P/E. To fully understand why you should be careful with CCL, check out our full research report (it’s free).

Two Stocks to Watch:

Applied Materials (AMAT)

Trailing 12-Month GAAP Operating Margin: 28.2%

Founded in 1967 as the first company to develop tools for other businesses in the semiconductor industry, Applied Materials (NASDAQ:AMAT) is the largest provider of semiconductor wafer fabrication equipment.

Why Are We Fans of AMAT?

1. Excellent operating margin of 28.7% highlights the efficiency of its business model
2. AMAT is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
3. Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures

At $324.70 per share, Applied Materials trades at 28.8x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.

Abbott Laboratories (ABT)

Trailing 12-Month GAAP Operating Margin: 18.2%

With roots dating back to 1888 when founder Dr. Wallace Abbott began producing precise, dosage-form medications, Abbott Laboratories (NYSE:ABT) develops and sells a diverse range of healthcare products including medical devices, diagnostics, nutrition products, and branded generic pharmaceuticals.

Why Are We Positive On ABT?

1. Scale advantages are evident in its $44.33 billion revenue base, which provides operating leverage when demand is strong
2. Strong free cash flow margin of 16.5% enables it to reinvest or return capital consistently
3. ROIC punches in at 13.2%, illustrating management’s expertise in identifying profitable investments

Abbott Laboratories is trading at $108.64 per share, or 19.6x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.

Stocks We Like Even More

ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.

Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.

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.