Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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. That said, here are two profitable companies that leverage their financial strength to beat the competition and one best left off your watchlist.
One Stock to Sell:
Sixth Street Specialty Lending (TSLX)
Trailing 12-Month GAAP Operating Margin: 77%
Originally launched as TPG Specialty Lending before rebranding in 2020, Sixth Street Specialty Lending (NYSE: TSLX) is a business development company that provides customized financing solutions to middle-market companies across various industries.
Why Do We Pass on TSLX?
- Muted 5.3% annual revenue growth over the last two years shows its demand lagged behind its financials peers
- Earnings per share fell by 3.3% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
Sixth Street Specialty Lending’s stock price of $21.44 implies a valuation ratio of 4.9x forward price-to-sales. Check out our free in-depth research report to learn more about why TSLX doesn’t pass our bar.
Two Stocks to Buy:
ESCO (ESE)
Trailing 12-Month GAAP Operating Margin: 15.8%
A developer of the communication systems used in the Batmobile of “The Dark Knight,” ESCO (NYSE: ESE) is a provider of engineered components for the aerospace, defense, and utility sectors.
Why Do We Love ESE?
- Demand is greater than supply as the company’s 29% average backlog growth over the past two years shows it’s securing new contracts and accumulating more orders than it can fulfill
- Operating margin improvement of 4.3 percentage points over the last five years demonstrates its ability to scale efficiently
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 30.9% over the last two years outstripped its revenue performance
At $200.22 per share, ESCO trades at 25.8x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .
Globalstar (GSAT)
Trailing 12-Month GAAP Operating Margin: 4.1%
Known for powering the emergency SOS feature in newer Apple iPhones, Globalstar (NASDAQ: GSAT) operates a network of low-earth orbit satellites that provide voice and data communications services in remote areas where traditional cellular networks don't reach.
Why Will GSAT Beat the Market?
- Market share has increased this cycle as its 15.6% annual revenue growth over the last five years was exceptional
- GSAT 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
- Improving returns on capital suggest its past investments are beginning to deliver value
Globalstar is trading at $66.05 per share, or 182.8x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.
