1 Profitable Stock Worth Your Attention and 2 to Avoid
A business making money today isn't necessarily a winner, which is why we analyze companies across multiple dimensions at StockStory. That said, here is one profitable company that balances growth and profitability and two that may struggle to keep up.
Two Stocks to Sell:
Rapid7 (RPD)
Trailing 12-Month GAAP Operating Margin: 3%
Founded in 2000 with the idea that network security comes before endpoint security, Rapid7 (NASDAQ:RPD) provides software as a service that helps companies understand where they are exposed to cyber security risks, quickly detect breaches and respond to them.
Why Do We Avoid RPD?
Average billings growth of 4.6% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
Estimated sales growth of 2% for the next 12 months implies demand will slow from its three-year trend
Free cash flow margin is forecasted to shrink by 2.4 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
Rapid7's stock price of $22.68 implies a valuation ratio of 1.7x forward price-to-sales. If you're considering RPD for your portfolio, see our FREE research report to learn more.
GEO Group (GEO)
Trailing 12-Month GAAP Operating Margin: 12%
With a global footprint spanning three continents and approximately 81,000 beds across 100 facilities, GEO Group (NYSE:GEO) operates secure facilities, processing centers, and reentry services for government agencies in the United States, Australia, and South Africa.
Why Is GEO Risky?
Flat sales over the last five years suggest it must find different ways to grow during this cycle
Performance over the past five years shows each sale was less profitable, as its earnings per share fell by 31.5% annually
8.9 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
At $25.50 per share, GEO Group trades at 14.3x forward P/E. Dive into our free research report to see why there are better opportunities than GEO.
One Stock to Buy:
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 Will CTAS Outperform?
Annual revenue growth of 8.6% over the last two years beat the sector average and underscores the unique value of its offerings
CTAS is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its growing cash flow gives it even more resources to deploy
Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures, and its returns are growing as it capitalizes on even better market opportunities
Cintas is trading at $213.01 per share, or 45.9x 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
The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 6 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
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
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