From Loss to Profit: Investing in Recently Profitable Firms

The days of growth-at-all-cost are over, and investors are now focusing on companies that can sustain themselves, instead of relying on cheap venture capital to fund their money-losing operations, as such funds are no longer readily available.

Companies capable of achieving positive free cash flow, or better yet, profitability, are seen as signs of self-sustainability.

Increasingly, I have observed that more young companies have 'graduated' to join the league of profitability, and their stock prices have generally performed well en route to achieving this status.

One example is Airbnb, which has been profitable for the last five consecutive quarters. It was also added to the S&P 500 as a component stock in September this year. ABNB's share price was up 49% year-to-date.

Thus, I believe there are opportunities to consider companies that were previously loss-making but have now turned profitable. This transition point may be a sweet spot for investors to capitalize on these growth stocks.

I will share five of them in this post.

#1 Palantir (PLTR)

Palantir is quite popular among investors, and its secretive 'black box' software makes it even more alluring. The company has secured lucrative defense contracts and has now expanded to commercial organizations.

Palantir has been profitable for the past four quarters and is rumored to be added to the S&P 500 in the next review. Its share price has gained 210% year-to-date, likely buoyed by the surging interest in AI technology.