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".

Not all profitable companies are created equal, and that’s why we built StockStory - to help you find the ones that truly shine bright. That said, here is one profitable company that balances growth and profitability and two that may face some trouble.

Two Stocks 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 Pass on ZWS?

1. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
2. Performance over the past five years was negatively impacted by new share issuances as its earnings per share dropped by 6.1% annually, worse than its revenue
3. Free cash flow margin shrank by 5.5 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive

Zurn Elkay’s stock price of $45.99 implies a valuation ratio of 32.4x forward P/E. Check out our free in-depth research report to learn more about why ZWS doesn’t pass our bar.

Interpublic Group (IPG)

Trailing 12-Month GAAP Operating Margin: 10.2%

With a history dating back to 1902 and roots in the McCann-Erickson agency, Interpublic Group (NYSE: IPG) is a marketing and communications holding company that owns agencies specializing in advertising, media buying, public relations, and digital marketing services.

Why Is IPG Risky?

1. Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
2. Demand will likely be weak over the next 12 months as Wall Street expects flat revenue
3. 17.1 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position

Interpublic Group is trading at $27.15 per share, or 9.9x forward P/E. If you’re considering IPG for your portfolio, see our FREE research report to learn more.

One Stock to Buy:

Celsius (CELH)

Trailing 12-Month GAAP Operating Margin: 14.7%

With its proprietary MetaPlus formula as the basis for key products, Celsius (NASDAQ: CELH) offers energy drinks that feature natural ingredients to help in fitness and weight management.

Why Should You Buy CELH?

1. Annual revenue growth of 50.7% over the last three years was superb and indicates its market share is rising
2. Earnings growth has massively outpaced its peers over the last three years as its EPS has compounded at 82.2% annually
3. Industry-leading 34.2% return on capital demonstrates management’s skill in finding high-return investments, and its rising returns show it’s making even more lucrative bets

At $59.53 per share, Celsius trades at 60.3x forward P/E. Is now the right time to buy? See for yourself in our in-depth 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 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-small-cap company Comfort Systems (+782% 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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