Companies with solid operating margins have a competitive edge, allowing them to reinvest for sustainable expansion. The best of these businesses balance profitability with reinvestment, setting themselves up for long-term success.

Not all profitable companies are worth your attention, but we’re here to highlight the ones with the most upside. Keeping that in mind, here are three profitable companies that generate reliable profits without sacrificing growth.

MACOM (MTSI)

Trailing 12-Month GAAP Operating Margin: 11.8%

Founded in the 1950s as Microwave Associates, a communications supplier to the US Army Signal Corp, today MACOM Technology Solutions (NASDAQ: MTSI) is a provider of analog chips used in optical, wireless, and satellite networks.

Why Are We Fans of MTSI?

1. Annual revenue growth of 9.9% over the past two years was outstanding, reflecting market share gains this cycle
2. Demand for the next 12 months is expected to accelerate above its two-year trend as Wall Street forecasts robust revenue growth of 21.6%
3. Earnings growth has trumped its peers over the last five years as its EPS has compounded at 81.7% annually

MACOM’s stock price of $138.36 implies a valuation ratio of 36.7x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.

AAON (AAON)

Trailing 12-Month GAAP Operating Margin: 15.8%

Backed by two million square feet of lab testing space, AAON (NASDAQ: AAON) makes heating, ventilation, and air conditioning equipment for different types of buildings.

Why Are We Backing AAON?

1. Impressive 20.7% annual revenue growth over the last five years indicates it’s winning market share this cycle
2. Exciting sales outlook for the upcoming 12 months calls for 15.7% growth, an acceleration from its two-year trend
3. Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures

At $83.69 per share, AAON trades at 34.5x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.

Royalty Pharma (RPRX)

Trailing 12-Month GAAP Operating Margin: 84%

Pioneering a unique business model in the pharmaceutical industry since 1996, Royalty Pharma (NASDAQ: RPRX) acquires rights to receive portions of sales from successful biopharmaceutical products, providing funding to drug developers without conducting research itself.

Why Do We Like RPRX?

1. Demand for the next 12 months is expected to accelerate above its two-year trend as Wall Street forecasts robust revenue growth of 22.4%
2. Efficiency rose over the last two years as its Adjusted operating margin increased by 60 percentage points
3. Free cash flow margin expanded by 28.7 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends

Royalty Pharma is trading at $36.84 per share, or 7.6x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.

Stocks We Like Even More

When Trump unveiled his aggressive tariff plan in April 2024, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.

Don’t let fear keep you from great opportunities and take a look at Top 5 Growth Stocks for this month. 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 Kadant (+351% 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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