23 Stocks That Score High on What Counts in the 2025 Market

Ralph Lauren is among the companies with a high profit margin. Here, its flagship men’s store in New York. (Bing Guan/Bloomberg)

Focus on profit margins.

Companies that keep a high percentage of their revenue are generally good places to invest. This is true during both market maelstroms and easier times.

This has proven reliable so many times over the past decade that buying such stocks has become a reflex for many investors when disruptive nonmarket events make it hard to price commodities, equities, options, futures, and bonds.

The interest in high-profit-margin stocks is so high that Goldman Sachs’ portfolio strategists recently sent clients a multisector list of such stocks.

Within the communications services sector, Electronic Arts and Meta Platforms have consensus 2025 gross margins of 81%, and Playtika Holding is at 72%.

Consumer discretionary stocks with high gross margins include Booking Holdings at 100%, Etsy at 72%, and Ralph Lauren at 69%.

The healthcare sector includes Exelixis at 97%, Doximity at 92%, and Stryker at 65%.

Materials stocks that rank well include Sherwin-Williams at 49%, and Element Solutions and DuPont at 43%.

Industrial stocks expected to deliver high gross margins in 2025 include Paychex at 78%, Nordson at 56%, and Automatic Data Processing at 52%.

Consumer staples stocks with high margin estimates include Altria at 73%, Coca-Cola and Colgate-Palmolive at 61%, and PepsiCo at 55%.

Information-technology stocks with high margin estimates include Dolby Laboratories at 89%, Adobe at 90%, Ansys at 92%, and Fortinet at 80%.

High-margin companies are sought after by investors—especially during periods like now, when Israel and Iran’s detente might prove shaky and Ukraine and Russia remain at war.

Such companies tend to be managed by skilled executives. The ones on Goldman’s list are even more impressive—they have reported high gross margins for the past five years.

One financial ratio alone, even one as important as profit margins, doesn’t provide safe passage. If that were true, everyone would be as rich as Warren Buffett. Still, high margins are an excellent place to begin.

Consider Stryker, which trades at around 52 times earnings and has an attractive gross margin. The medical company is a player in the joint-replacement business as the obesity epidemic and the graying of America provide a steady stream of patients who need new joints.

With Stryker at $386.46, the September $380 put option could be sold for about $12, and the September $400 call option could be bought for about $13.

The call is worth $25 if the stock is at $425 at expiration. If the stock is below $380, investors must buy the stock or adjust the put to avoid assignment. During the past 52 weeks, Stryker has traded between $314.93 and $406.19.

The September expiration expresses a view that Stryker’s margins will attract investors who want a safety buffer amid chaos. The expiration also covers second-quarter earnings, which are expected in late August.

The risk-reversal strategy—selling a put and buying a call with the same expiration—positions investors to participate in advances and to buy good stocks at lower prices.

Stryker could soon test long-term technical support at $372.42. If support holds, the stock should rally higher. There is risk of buying the stock after a breakdown, but Stryker has historically outperformed the S&P 500 index.

Of course, should the quick end to the latest troubles in the Middle East prove illusory, high-margin stocks, even more than usual, should become quite popular.

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