Top 20 Companies With the Strongest Businesses
Marvin's rules picked 20 companies with the strongest businesses, ranked by Business Quality score within each industry. They include BioCryst, NVIDIA, Victory Capital, AppLovin and Independent Bank, across many sectors.
A strong business usually earns healthy profits, turns sales into cash, and does not lean too heavily on borrowed money. This list collects 20 companies that Marvin's Business Quality score rates highly compared with other companies in their own industries.
The list covers technology, healthcare, finance, industrials, energy, gold mining, real estate and more. Because each company is judged against its own industry, a bank and a chip maker are not measured against the same yardstick.
Keep in mind that a strong business is not the same as a good stock to own, and the scores describe today only. Some figures are missing for certain companies, and each blurb below says so.
The list
How Marvin ranked these stocks
Marvin included companies above a minimum size threshold and ranked them by Business Quality score, highest first, with ties ordered by overall score. No more than three companies from any one sector are included. All Marvin scores are relative to each company's own industry, so they show how a company compares with its direct peers today and do not predict future results.
Companies above about $300 million in size, ranked by Marvin scores (0-100, relative to each company's own industry). Highest Business Quality score first; at most 3 per sector.
The stocks, one by one
BioCryst Pharmaceuticals, Inc. BCRX
BioCryst shows fast revenue growth of 94.1%, a very high gross margin of 97.8%, and a free cash flow margin of 39.7%. Caution: its operating margin is -33.3%, a loss on that measure, so the picture is mixed.
NVIDIA Corporation NVDA
NVIDIA combines revenue growth of 65.5% with an operating margin of 65.2% and a return on equity of 84.2%, signs of strong profits and growth. Debt-to-equity is a low 0.17. Caution: semiconductor results can shift from year to year.
Victory Capital Holdings, Inc. VCTR
Victory Capital has an operating margin of 41.3% and a free cash flow margin of not reported, which suggest strong profits and cash generation. Debt-to-equity is a modest 0.43. Caution: gross margin is not available, so cost details are incomplete.
AppLovin Corporation APP
AppLovin shows revenue growth of 70.0% and a very high return on equity of 139.4%, suggesting fast expansion and efficient use of shareholder money. Caution: margin and debt figures are not available here, so the profit and risk picture is incomplete.
Independent Bank Corp. INDB
Independent Bank Corp. earns a Business Quality score of 97, yet its return on equity is a modest 7.7%. Caution: growth, margin and debt figures are not available, and its Opportunity score of 81 is lower than its quality score.
Microsoft Corporation MSFT
Microsoft pairs revenue growth of 17.8% with a strong operating margin of 46.8% and a return on equity of 30.2%. Debt-to-equity is low at 0.29. Caution: its Opportunity score of 83 is well below its quality score.
Booking Holdings Inc. BKNG
Booking Holdings has an operating margin of 32.9% and a free cash flow margin of 33.8%, strong profit and cash conversion, with steady revenue growth of 13.4%. Caution: return on equity and debt figures are missing, and its Opportunity score is only 66.
AMETEK, Inc. AME
AMETEK grows revenue at a modest 6.6% but keeps an operating margin of 25.9% and a free cash flow margin of 23.2%, suggesting a solid, profitable business. Caution: its Opportunity score is 55, and the debt figure is not available.
EQT Corporation EQT
EQT shows revenue growth of 63.9%, an operating margin of 42.5% and low debt-to-equity of 0.22. Caution: return on equity is a modest 10.7%, and energy producers' results tend to move with commodity markets.
Graco Inc. GGG
Graco has an operating margin of 28.1%, a free cash flow margin of 27.8% and a return on equity of 21.1%, all signs of a profitable machinery maker. Caution: revenue growth is slow at 5.8%, and debt data is not available.
Alphabet Inc. GOOGL
Alphabet has an operating margin of 33.1%, a return on equity of 38.1% and revenue growth of 15.1%. Caution: its free cash flow margin of 11.9% is much lower than its operating margin, and debt data is not available.
Snap-on Incorporated SNA
Snap-on earns an operating margin of 25.4% and a free cash flow margin of 21.0%, with low debt-to-equity of 0.22. Caution: revenue growth was barely positive at 0.9%, so its strength lies in profitability more than expansion.
Amazon.com, Inc. AMZN
Amazon grew revenue 12.4% and earned a return on equity of 24.5%, but its operating margin is a thin 12.1%. Caution: free cash flow margin was -1.5%, meaning it spent more cash than it generated in the last fiscal year.
Newmont Corporation NEM
Newmont grew revenue 21.3% and has a free cash flow margin of 37.8%, a return on equity of 24.4% and low debt-to-equity of 0.14. Caution: operating margin and gross margin are not available, so profitability is only partly visible.
Cincinnati Financial Corporation CINF
Cincinnati Financial has a free cash flow margin of not reported, a return on equity of 20.0% and very low debt-to-equity of 0.05, with revenue growth of 11.4%. Caution: operating margin is not available, and its Opportunity score is 59.
Edwards Lifesciences Corporation EW
Edwards Lifesciences has a gross margin of 77.8%, an operating margin of 22.3% and revenue growth of 11.5%, indicating a profitable medical device business. Caution: return on equity is modest at 9.5%, and its Opportunity score is just 22.
Krystal Biotech, Inc. KRYS
Krystal Biotech shows revenue growth of 33.9%, an operating margin of 44.9% and a free cash flow margin of 58.5%, strong for a biotechnology company. Caution: gross margin and debt figures are missing, and its Opportunity score is 60.
AngloGold Ashanti Plc AU
AngloGold Ashanti grew revenue 70.8% and has a gross margin of 49.2%, a return on equity of 39.2% and debt-to-equity of 0.28. Caution: operating margin and free cash flow margin are not available, so cash profits cannot be confirmed here.
CareTrust REIT, Inc. CTRE
CareTrust REIT shows revenue growth of 60.8% and debt-to-equity of 0.27, a fairly low level. Caution: return on equity is modest at 7.9%, and margin figures are not available, so the profit picture is thin.
Ellington Financial Inc. EFC
Ellington Financial scores 96 on quality and 97 on opportunity within its mortgage REIT industry, with a return on equity of 9.9%. Caution: growth, margin and debt figures are all missing, so this blurb rests on very little data.
Common questions
What does the Business Quality score measure?
It shows how a company's business compares with other companies in its own industry today. A high score means it looks strong against its direct peers, not against every stock in the market.
Does a high score mean I should buy the stock?
No. The scores describe a company's current standing and say nothing about whether its share price will rise or fall. A strong business can still be a poor investment, so use this list as a starting point for your own research.
Why are some figures missing for certain companies?
Not every measure applies to every kind of company, and some were not available for this data. Banks and insurers, for example, do not report gross margin the way manufacturers do. When a figure is missing, the blurb says so, and the picture for that company is less complete.
Keep reading
- Top 25 Quality Stocks Trading Well Below Their Highs
- Top 20 Stocks for Beginners: Large, Profitable, Low-Debt
- Top 20 Good Stocks With the Least Debt
- Top 20 Stocks to Hold for the Long Term, Ranked by Marvin
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Marvin's scores (0-100) compare each company with others in its industry today. Growth and margin figures come from SEC filings. This is general information, not personal investment advice or a recommendation to buy or sell anything. Do your own research.