Profitable companies tend to be more resilient, giving them the flexibility to invest and return capital to shareholders. Businesses that consistently generate earnings can better navigate downturns and capitalize on new opportunities.
Identifying the most compelling profitable companies isn’t always straightforward, and that’s why we started StockStory. Keeping that in mind, here are three profitable companies that leverage their financial strength to beat the competition.
ESCO (ESE)
Trailing 12-Month GAAP Operating Margin: 15.5%
A developer of the communication systems used in the Batmobile of “The Dark Knight,” ESCO (NYSE: ESE) is a provider of engineered components for the aerospace, defense, and utility sectors.
Why Should ESE Be on Your Watchlist?
- Demand for the next 12 months is expected to accelerate above its two-year trend as Wall Street forecasts robust revenue growth of 18.2%
- Offerings are mission-critical for businesses and lead to a top-tier gross margin of 38.9%
- Earnings growth has trumped its peers over the last two years as its EPS has compounded at 20.7% annually
ESCO is trading at $194.50 per share, or 31.4x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Cintas (CTAS)
Trailing 12-Month GAAP Operating Margin: 22.8%
Starting as a family business collecting and cleaning shop rags in Cincinnati, Cintas (NASDAQ: CTAS) provides corporate identity uniforms, facility services, and safety products to over one million businesses across North America.
Why Are We Backing CTAS?
- 8.6% annual revenue growth over the last two years surpassed the sector average as its services resonated with customers
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its improved cash conversion implies it’s becoming a less capital-intensive business
- Industry-leading 24.7% return on capital demonstrates management’s skill in finding high-return investments, and its rising returns show it’s making even more lucrative bets
Cintas’s stock price of $220.50 implies a valuation ratio of 47.4x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
W. R. Berkley (WRB)
Trailing 12-Month GAAP Operating Margin: 16%
Founded in 1967 and operating through more than 50 specialized insurance units across the globe, W. R. Berkley (NYSE: WRB) underwrites commercial insurance and reinsurance through specialized subsidiaries serving industries from healthcare to construction to transportation.
Why Will WRB Beat the Market?
- Impressive 13.6% annual net premiums earned growth over the last four years indicates it’s winning market share this cycle
- Share buybacks catapulted its annual earnings per share growth to 24.7%, which outperformed its revenue gains over the last five years
- Capital strength is on track to rise over the next 12 months as its 26.6% projected book value per share growth implies profitability will accelerate from its two-year trend
At $72.29 per share, W. R. Berkley trades at 2.8x forward P/B. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking 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 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
