1 Profitable Stock on Our Buy List and 2 Facing Challenges

Barchart·04/08/2026 04:46:17

Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages. Just because a business is in the green today doesn’t mean it will thrive tomorrow.

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 is one profitable company that leverages its financial strength to beat the competition and two best left off your watchlist.

Two Stocks to Sell:

UFP Technologies (UFPT)

Trailing 12-Month GAAP Operating Margin: 15.4%

With expertise dating back to 1963 in specialized materials and precision manufacturing, UFP Technologies (NASDAQ:UFPT) designs and manufactures custom solutions for medical devices, sterile packaging, and other highly engineered products for healthcare and industrial applications.

Why Does UFPT Worry Us?

1. Modest revenue base of $602.8 million gives it less fixed cost leverage and fewer distribution channels than larger companies

UFP Technologies is trading at $188.82 per share, or 19x forward P/E. Check out our free in-depth research report to learn more about why UFPT doesn’t pass our bar.

First Advantage (FA)

Trailing 12-Month GAAP Operating Margin: 8.4%

Processing over 200 million screens annually across more than 200 countries and territories, First Advantage (NASDAQ:FA) provides employment background screening, identity verification, and compliance solutions to help companies manage hiring risks.

Why Are We Cautious About FA?

1. Flat earnings per share over the last four years lagged its peers
2. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 8.6 percentage points
3. Underwhelming 0.7% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its decreasing returns suggest its historical profit centers are aging

At $11.28 per share, First Advantage trades at 9.3x forward P/E. Read our free research report to see why you should think twice about including FA in your portfolio.

One Stock to Buy:

Woodward (WWD)

Trailing 12-Month GAAP Operating Margin: 14.5%

Initially designing controls for water wheels in the early 1900s, Woodward (NASDAQ:WWD) designs, services, and manufactures energy control products and optimization solutions.

Why Will WWD Beat the Market?

1. Market share has increased this cycle as its 10.9% annual revenue growth over the last two years was exceptional
2. Operating margin expanded by 4.3 percentage points over the last five years as it scaled and became more efficient
3. Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 29.4% annually

Woodward’s stock price of $384.32 implies a valuation ratio of 42.5x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.

Stocks We Like Even More

ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.

Find out which 5 stocks it's flagging for this month — FREE. Get Our Top 5 Growth 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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.

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