Profitability is a key measure of business strength. Companies with high margins have proven they can generate consistent earnings while maintaining financial discipline.
Not all profitable companies are worth your attention, but we’re here to highlight the ones with the most upside. That said, here are three profitable companies that generate reliable profits without sacrificing growth.
Marvell Technology (MRVL)
Trailing 12-Month GAAP Operating Margin: 16%
Moving away from a low margin storage device management chips in one of the biggest semiconductor business model pivots of the past decade, Marvell Technology (NASDAQ: MRVL) is a fabless designer of special purpose data processing and networking chips used by data centers, communications carriers, enterprises, and autos.
Why Do We Watch MRVL?
- Impressive 22.9% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
- Earnings growth has easily exceeded the peer group average over the last five years as its EPS has compounded at 23.8% annually
Marvell Technology’s stock price of $236.09 implies a valuation ratio of 55x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
LegalZoom (LZ)
Trailing 12-Month GAAP Operating Margin: 4.1%
Founded by famous lawyer Robert Shapiro, LegalZoom (NASDAQ: LZ) offers online legal services and documentation assistance for individuals and businesses.
Why Are We Positive on LZ?
- Has the opportunity to boost monetization through new features and premium offerings as its subscription units have grown by 10.7% annually over the last two years
- Platform’s growing usage and its ability to increase user spending by 17.2% annually showcases its high switching costs
- Excellent EBITDA margin of 23.1% highlights the efficiency of its business model, and its profits increased over the last few years as it scaled
At $5.71 per share, LegalZoom trades at 4.2x forward EV/EBITDA. Is now the right time to buy? Find out in our full research report, it’s free.
Omnicom Group (OMC)
Trailing 12-Month GAAP Operating Margin: 5%
With a vast network of creative agencies that helped craft some of the most memorable ad campaigns in history, Omnicom Group (NYSE: OMC) is a strategic holding company that provides advertising, marketing, and communications services to many of the world's largest companies.
Why Is OMC a Top Pick?
- Annual revenue growth of 21.6% over the last two years was superb and indicates its market share increased during this cycle
- Unparalleled revenue scale of $22.37 billion gives it an edge in distribution
- Free cash flow margin grew by 5 percentage points over the last five years, giving the company more chips to play with
Omnicom Group is trading at $87.54 per share, or 8.5x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
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