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 struggle to keep up.

Two Stocks to Sell:

Knight-Swift Transportation (KNX)

Trailing 12-Month GAAP Operating Margin: 4%

Covering 1.6 billion loaded miles in 2023 alone, Knight-Swift Transportation (NYSE: KNX) offers less-than-truckload and full truckload delivery services.

Why Is KNX Risky?

1. 4.3% annual revenue growth over the last two years was slower than its industrials peers
2. 9.1 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
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

Knight-Swift Transportation’s stock price of $42.76 implies a valuation ratio of 23.4x forward P/E. Check out our free in-depth research report to learn more about why KNX doesn’t pass our bar.

DXC (DXC)

Trailing 12-Month GAAP Operating Margin: 6.8%

Born from the 2017 merger of Computer Sciences Corporation and HP Enterprise's services business, DXC Technology (NYSE: DXC) is a global IT services company that helps businesses transform their technology infrastructure, applications, and operations.

Why Do We Avoid DXC?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
2. Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
3. ROIC of 1.2% reflects management’s challenges in identifying attractive investment opportunities, and its falling returns suggest its earlier profit pools are drying up

At $14.47 per share, DXC trades at 4.8x forward P/E. If you’re considering DXC for your portfolio, see our FREE research report to learn more.

One Stock to Buy:

Morningstar (MORN)

Trailing 12-Month GAAP Operating Margin: 22.3%

Founded in 1984 by Joe Mansueto with just $80,000 in personal savings, Morningstar (NASDAQ: MORN) provides independent investment data, research, and analysis tools that help investors, advisors, and institutions make informed financial decisions.

Why Is MORN a Good Business?

1. Annual revenue growth of 12.7% over the last five years beat the sector average and underscores the unique value of its offerings
2. Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 321% outpaced its revenue gains
3. Stellar return on equity showcases management’s ability to surface highly profitable business ventures

Morningstar is trading at $257.72 per share, or 27.5x forward P/E. Is now a good time to buy? Find out in our full 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 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-micro-cap company Tecnoglass (+1,754% 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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