2 Profitable Stocks with Impressive Fundamentals and 1 We Find Risky

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. Keeping that in mind, here are two profitable companies that leverage their financial strength to beat the competition and one that may face some trouble.

One Stock to Sell:

BJ's (BJ)

Trailing 12-Month GAAP Operating Margin: 4%

Appealing to the budget-conscious individual shopping for a household, BJ’s Wholesale Club (NYSE:BJ) is a membership-only retail chain that sells groceries, appliances, electronics, and household items, often in bulk quantities.

Why Are We Hesitant About BJ?

1. Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
2. Gross margin of 18.4% is below its competitors, leaving less money for marketing and promotions
3. Poor expense management has led to an operating margin of 3.9% that is below the industry average

BJ’s stock price of $93.14 implies a valuation ratio of 20.9x forward P/E. To fully understand why you should be careful with BJ, check out our full research report (it’s free for active Edge members).

Two Stocks to Buy:

Inspire Medical Systems (INSP)

Trailing 12-Month GAAP Operating Margin: 4.8%

Offering an alternative for the millions who struggle with traditional CPAP machines, Inspire Medical Systems (NYSE:INSP) develops and sells an implantable neurostimulation device that treats obstructive sleep apnea by stimulating nerves to keep airways open during sleep.

Why Will INSP Beat the Market?

1. Controlled growth in new domestic medical centersdomestic medical centers reflects a methodical approach to market expansion
2. Earnings per share grew by 22.5% annually over the last five years and trumped its peers
3. Free cash flow margin grew by 31.8 percentage points over the last five years, giving the company more chips to play with

At $78.46 per share, Inspire Medical Systems trades at 96.1x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.

Visa (V)

Trailing 12-Month GAAP Operating Margin: 62.2%

Processing over 829 million transactions daily and connecting billions of cards to 150 million merchant locations worldwide, Visa (NYSE:V) operates one of the world's largest electronic payments networks, facilitating secure money movement across more than 200 countries through its VisaNet processing platform.

Why Should You Buy V?

1. Solid 11.2% annual revenue growth over the last five years indicates its offering’s solve complex business issues
2. Share repurchases over the last five years enabled its annual earnings per share growth of 16.8% to outpace its revenue gains
3. ROE punches in at 42.9%, illustrating management’s expertise in identifying profitable investments

Visa is trading at $341.86 per share, or 27x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free for active Edge members.

Stocks We Like Even More

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking 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 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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