Even if a company is profitable, it doesn’t always mean it’s a great investment. Some struggle to maintain growth, face looming threats, or fail to reinvest wisely, limiting their future potential.
Not all profitable companies are created equal, and that’s why we built StockStory - to help you find the ones that truly shine bright. 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:
Q2 Holdings (QTWO)
Trailing 12-Month GAAP Operating Margin: 10%
With a platform powering digital services for approximately 25 million account holders across America, Q2 Holdings (NYSE: QTWO) provides cloud-based digital solutions that help financial institutions, fintechs, and alternative finance companies deliver modern banking experiences to their customers.
Why Are We Cautious About QTWO?
- Offerings struggled to generate meaningful interest as its average billings growth of 7.7% over the last year did not impress
- Estimated sales growth of 9.6% for the next 12 months implies demand will slow from its two-year trend
- Sky-high servicing costs result in an inferior gross margin of 57% that must be offset through increased usage
Q2 Holdings is trading at $64.75 per share, or 4.7x forward price-to-sales. If you’re considering QTWO for your portfolio, see our FREE research report to learn more.
ManpowerGroup (MAN)
Trailing 12-Month GAAP Operating Margin: 1.5%
Founded during the post-World War II economic boom when businesses needed temporary workers, ManpowerGroup (NYSE: MAN) connects millions of people to employment opportunities through its global network of staffing, recruitment, and workforce management services.
Why Do We Avoid MAN?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 1.2% annually over the last five years
- Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 13.8% annually, worse than its revenue
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
At $57.35 per share, ManpowerGroup trades at 14.3x forward P/E. Check out our free in-depth research report to learn more about why MAN doesn’t pass our bar.
One Stock to Buy:
ADP (ADP)
Trailing 12-Month GAAP Operating Margin: 26.3%
Processing one out of every six paychecks in the United States, ADP (NASDAQ: ADP) provides cloud-based human capital management solutions that help businesses manage payroll, benefits, talent acquisition, and HR administration.
Why Is ADP a Top Pick?
- Solid 7.9% annual revenue growth over the last five years indicates its offerings solve complex business issues
- Enormous revenue base of $21.95 billion provides significant distribution advantages
- ADP is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its improved cash conversion implies it’s becoming a less capital-intensive business
ADP’s stock price of $274.04 implies a valuation ratio of 22.5x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
