Why Profit Alone Isn’t Enough: 2 Stocks to Buy in 2025—and One to Avoid
In the world of investing, profits are essential—but they’re not everything.
As Amazon founder Jeff Bezos famously said, “Your margin is my opportunity.” This means companies that rely solely on high margins without adapting to competition or innovation are vulnerable. They might appear strong on the surface, but they risk falling behind.
At StockStory, we focus on identifying companies with sustainable long-term potential, not just those posting short-term gains. Today, we highlight two companies that strike a healthy balance between profitability and growth, and one company we recommend you remove from your watchlist.
❌ Skip: Cisco Systems (NASDAQ: CSCO)
Trailing 12-Month GAAP Operating Margin: 19%
Founded in 1984 to solve early networking problems between Stanford and UC Berkeley, Cisco has long been a household name in enterprise tech. It offers networking equipment, cybersecurity tools, and business collaboration software.
But here's why we’re steering clear of CSCO:
- Flat sales growth over the past two years suggests Cisco has failed to capitalize on the current growth cycle.
- Free cash flow margins have deteriorated by 6.3 percentage points over the past five years—an indication of rising capital intensity.
- Returns on capital are declining, suggesting its legacy business units are aging without effective reinvention.
Cisco trades at 15.7x forward P/E, priced at $59.26 per share—but we don’t see long-term value here.
✅ Buy: Vital Farms (NASDAQ: VITL)
Trailing 12-Month GAAP Operating Margin: 10.5%
Vital Farms is redefining how we consume eggs and butter. With a mission focused on ethical and sustainable farming, this company leads the pasture-raised food movement in the U.S.
Here’s why we’re bullish on VITL:
- Unit sales have grown 18.9% over the last two years, reflecting strong consumer demand.
- Revenue projections remain strong, showing Vital Farms is poised to grab even more market share.
- Earnings per share have soared, growing at an impressive 193% annually over the past three years—far outpacing peers.
Currently trading at $36.05 per share (29.6x forward P/E), Vital Farms is a growth story you won’t want to miss.
✅ Buy: Pure Storage (NYSE: PSTG)
Trailing 12-Month GAAP Operating Margin: 2.7%
Founded in 2009, Pure Storage delivers high-performance data storage hardware and software tailored for both on-premises and cloud environments.
Why PSTG could outperform in 2025 and beyond:
- Recurring revenue (ARR) trends confirm long-term contract strength and stable income.
- EPS has grown 46.4% annually, outpacing even its robust revenue growth.
- Strong free cash flow margin of 16% provides strategic flexibility for future growth, investment, or shareholder return.
With shares trading at $47.98 (27.1x forward P/E), Pure Storage is well-positioned in an increasingly data-driven economy.
🌍 The Big Picture: What’s Next for Markets in 2025?
Following Donald Trump’s victory in the 2024 U.S. presidential election, stock markets surged to all-time highs. But as concerns around tariffs and economic health grow, volatility has returned.
In such an uncertain macro environment, identifying resilient growth stocks becomes even more important. At StockStory, we’ve curated a list of Top 5 Growth Stocks for 2025, which includes both household names and hidden gems. Since 2019, our picks have returned over 175%, including Nvidia (+2,183%) and United Rentals (+322%).