High Gross Margin Stocks: Invest in Highly Profitable and Resilient Businesses

Refreshed Nov 6, 2026

High Gross Margin Stocks are elite companies with massive pricing power and superior profitability that can easily absorb rising costs.

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This screen is currently exhibiting strong clustering in the Financial Services sector (37% of constituents).

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Ticker	Company	Price	Mkt Cap	Return 6M	D/E	Gross Margin
TXN	Texas Instruments Incorporated	$278.15	$254.02B	-3.9%	0.9	60.2%
KLAC	KLA Corporation	$129.80	$169.56B	-28.5%	0.9	61.5%
BAP	Credicorp Ltd.	$347.99	$27.65B	6.6%	0.9	91.8%
ADSK	Autodesk, Inc.	$269.16	$56.83B	10.7%	0.9	91.2%
ADEA	Adeia Inc.	$14.82	$1.63B	-49.2%	0.9	62.8%
VLTO	Veralto Corporation	$116.55	$28.59B	34.2%	0.9	60.2%
SEZL	Sezzle Inc.	$155.00	$5.21B	80.2%	0.8	90.8%
EHC	Encompass Health Corporation	$141.27	$14.01B	34.5%	0.8	66.2%
SFBS	ServisFirst Bancshares, Inc.	$41.32	$4.52B	3.7%	0.8	93.2%
NDAQ	Nasdaq, Inc.	$106.83	$59.72B	19.8%	0.8	65.7%
FTNT	Fortinet, Inc.	$122.51	$89.76B	36.2%	0.8	79.7%
AVGO	Broadcom Inc.	$291.53	$1.39T	-31.5%	0.8	67.5%
NVS	Novartis AG	$161.93	$307.78B	9.1%	0.8	74.6%
CBSH	Commerce Bancshares, Inc.	$55.22	$8.05B	5.1%	0.8	97%
UNTY	Unity Bancorp, Inc.	$57.77	$580M	8.8%	0.8	97.7%
FIGR	Figure Technology Solutions, Inc. Class A Common Stock	$20.90	$3.82B	-45%	0.8	95.3%
SYK	Stryker Corporation	$335.08	$128.46B	14.6%	0.7	65.5%
TMP	Tompkins Financial Corporation	$100.02	$1.44B	16.5%	0.7	98.4%
PODD	Insulet Corp.	$156.12	$10.81B	3.2%	0.7	71.1%
NBN	Northeast Bank	$124.93	$1.04B	-2.4%	0.7	100.2%
CHKP	Check Point Software Technologies Ltd.	$148.18	$15.13B	29.7%	0.7	85.7%
MGNI	Magnite, Inc.	$27.52	$3.94B	105.5%	0.7	64.8%
NVO	Novo Nordisk A/S	$40.30	$178.96B	-11.9%	0.7	80.6%
IDXX	IDEXX Laboratories, Inc.	$670.71	$52.91B	15.8%	0.7	62.7%
SCCO	Southern Copper Corporation	$165.38	$141.12B	-8.1%	0.7	63.8%
V	Visa Inc.	$422.59	$789B	32.6%	0.7	82.5%
CHCO	City Holding Company	$142.05	$2B	15.5%	0.6	78.8%
AFYA	Afya Limited	$10.15	$916M	-28.6%	0.6	64%
SCHW	The Charles Schwab Corporation	$92.58	$161.01B	0.5%	0.6	97%
LPG	Dorian LPG Ltd.	$46.08	$1.97B	18%	0.6	63.3%

TXN

Texas Instruments Incorporated

$278.15Price

Mkt Cap$254.02B

Return 6M-3.9%

D/E0.9

Gross Margin60.2%

KLAC

KLA Corporation

$129.80Price

Mkt Cap$169.56B

Return 6M-28.5%

D/E0.9

Gross Margin61.5%

BAP

Credicorp Ltd.

$347.99Price

Mkt Cap$27.65B

Return 6M6.6%

D/E0.9

Gross Margin91.8%

ADSK

Autodesk, Inc.

$269.16Price

Mkt Cap$56.83B

Return 6M10.7%

D/E0.9

Gross Margin91.2%

ADEA

Adeia Inc.

$14.82Price

Mkt Cap$1.63B

Return 6M-49.2%

D/E0.9

Gross Margin62.8%

VLTO

Veralto Corporation

$116.55Price

Mkt Cap$28.59B

Return 6M34.2%

D/E0.9

Gross Margin60.2%

SEZL

Sezzle Inc.

$155.00Price

Mkt Cap$5.21B

Return 6M80.2%

D/E0.8

Gross Margin90.8%

EHC

Encompass Health Corporation

$141.27Price

Mkt Cap$14.01B

Return 6M34.5%

D/E0.8

Gross Margin66.2%

SFBS

ServisFirst Bancshares, Inc.

$41.32Price

Mkt Cap$4.52B

Return 6M3.7%

D/E0.8

Gross Margin93.2%

NDAQ

Nasdaq, Inc.

$106.83Price

Mkt Cap$59.72B

Return 6M19.8%

D/E0.8

Gross Margin65.7%

FTNT

Fortinet, Inc.

$122.51Price

Mkt Cap$89.76B

Return 6M36.2%

D/E0.8

Gross Margin79.7%

AVGO

Broadcom Inc.

$291.53Price

Mkt Cap$1.39T

Return 6M-31.5%

D/E0.8

Gross Margin67.5%

NVS

Novartis AG

$161.93Price

Mkt Cap$307.78B

Return 6M9.1%

D/E0.8

Gross Margin74.6%

CBSH

Commerce Bancshares, Inc.

$55.22Price

Mkt Cap$8.05B

Return 6M5.1%

D/E0.8

Gross Margin97%

UNTY

Unity Bancorp, Inc.

$57.77Price

Mkt Cap$580M

Return 6M8.8%

D/E0.8

Gross Margin97.7%

FIGR

Figure Technology Solutions, Inc. Class A Common Stock

$20.90Price

Mkt Cap$3.82B

Return 6M-45%

D/E0.8

Gross Margin95.3%

SYK

Stryker Corporation

$335.08Price

Mkt Cap$128.46B

Return 6M14.6%

D/E0.7

Gross Margin65.5%

TMP

Tompkins Financial Corporation

$100.02Price

Mkt Cap$1.44B

Return 6M16.5%

D/E0.7

Gross Margin98.4%

PODD

Insulet Corp.

$156.12Price

Mkt Cap$10.81B

Return 6M3.2%

D/E0.7

Gross Margin71.1%

NBN

Northeast Bank

$124.93Price

Mkt Cap$1.04B

Return 6M-2.4%

D/E0.7

Gross Margin100.2%

CHKP

Check Point Software Technologies Ltd.

$148.18Price

Mkt Cap$15.13B

Return 6M29.7%

D/E0.7

Gross Margin85.7%

MGNI

Magnite, Inc.

$27.52Price

Mkt Cap$3.94B

Return 6M105.5%

D/E0.7

Gross Margin64.8%

NVO

Novo Nordisk A/S

$40.30Price

Mkt Cap$178.96B

Return 6M-11.9%

D/E0.7

Gross Margin80.6%

IDXX

IDEXX Laboratories, Inc.

$670.71Price

Mkt Cap$52.91B

Return 6M15.8%

D/E0.7

Gross Margin62.7%

SCCO

Southern Copper Corporation

$165.38Price

Mkt Cap$141.12B

Return 6M-8.1%

D/E0.7

Gross Margin63.8%

Visa Inc.

$422.59Price

Mkt Cap$789B

Return 6M32.6%

D/E0.7

Gross Margin82.5%

CHCO

City Holding Company

$142.05Price

Mkt Cap$2B

Return 6M15.5%

D/E0.6

Gross Margin78.8%

AFYA

Afya Limited

$10.15Price

Mkt Cap$916M

Return 6M-28.6%

D/E0.6

Gross Margin64%

SCHW

The Charles Schwab Corporation

$92.58Price

Mkt Cap$161.01B

Return 6M0.5%

D/E0.6

Gross Margin97%

LPG

Dorian LPG Ltd.

$46.08Price

Mkt Cap$1.97B

Return 6M18%

D/E0.6

Gross Margin63.3%

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Learn more about High Gross Margin Stocks: Invest in Highly Profitable and Resilient Businesses

How We Build This List

Gross Profit Margin > 60%Ensures the company operates with a premium product or service, allowing for massive pricing power.
Operating Margin > 15%Confirms that high gross profits are not entirely consumed by excessive SG&A or R&D expenses.
Return on Equity (ROE) > 15%Indicates management is highly efficient at generating profits from shareholder equity.
Revenue Growth (YoY) > 5%Filters out declining businesses and focuses on growing franchises.
Debt-to-Equity Ratio < 1.0Maintains a safe balance sheet, protecting the high-margin business from debt distress.

Open Screener

What Makes a Stock a High Gross Margin Stocks constituent?

This screen identifies companies with gross margins exceeding 60%, a hallmark of pricing power and competitive moats. By filtering for high-margin businesses like Microsoft, which maintained 68% margins in 2023, investors can isolate firms that easily absorb inflationary costs compared to low-margin retailers like Target, which struggled with 25% margins during the 2022 supply chain crunch.

>60% GM

Profitability

Gross Margin > 60%

ROE 15+

Efficiency

ROE >= 15%

Low Debt

Solvency

D/E Ratio < 0.5

Filter for Pricing Power

Select companies with gross margins above 60% to ensure they dictate prices, similar to Apple's 44% margins which allowed it to thrive during the 2022 inflation surge.

Verify Capital Efficiency

Require ROE above 15% to ensure high margins translate to shareholder wealth, as seen with Visa's consistent 30%+ ROE over the last decade.

Check Balance Sheet Health

Limit D/E to under 0.5 to avoid interest rate sensitivity, protecting against the 2022 rate hike cycle that crushed highly leveraged firms like Carvana.

Performance Dynamics: When Does This Strategy Outperform?

Strategy performance behaves differently based on market conditions. Let's analyze when this strategy outperforms and when it lags:

When High Margins Lead

✓ During the 2022 inflationary spike, high-margin software stocks outperformed the broader S&P 500 by 12% as they passed costs to customers.
✓ In the 2008 financial crisis, firms with 60%+ margins like Johnson & Johnson saw 20% less volatility than the average industrial stock.
✓ During the 2020 pandemic recovery, high-margin tech leaders like Adobe grew 40% as demand for digital infrastructure surged.

When High Margins Trail

✗ In the 2021 'reopening' trade, low-margin cyclical stocks like airlines outperformed high-margin tech by 25% as travel demand exploded.
✗ During the 2016 commodity rebound, energy stocks with low margins surged 30% while high-margin tech stagnated due to valuation saturation.
✗ When interest rates dropped to near zero in 2020, capital-intensive, low-margin utilities provided a 10% dividend yield advantage over growth stocks.

How to Use the Screener Results Table

To build a resilient portfolio, do not buy stocks on simple statistics alone. Use the key columns in our table to audit the durability, safety, and returns of each stock:

Gross Margin Percentage

Measures core pricing power; Adobe's 88% margin shows extreme software scalability compared to Ford's 10% automotive margin.

Return on Equity Percentage

Indicates management efficiency; Home Depot's 100%+ ROE demonstrates superior capital usage compared to a typical utility's 10% ROE.

Debt to Equity Ratio

Shows leverage risk; Microsoft's 0.3 ratio provides safety during rate hikes, unlike AT&T's 1.5 ratio which limits dividend growth.

Operating Margin Percentage

Shows efficiency after overhead; Meta's 35% operating margin in 2023 highlights its dominance versus Intel's 5% margin.

Risk Factors & Warning Signs to Track

The Valuation Overhang

High-margin stocks often trade at extreme premiums, leading to 'multiple compression' if growth slows. For example, Zoom traded at 100x sales in 2020, but as growth normalized in 2022, the stock plummeted 80% despite maintaining high gross margins.

What are High Gross Margin Stocks?

High gross margin stocks represent companies that retain a massive portion of their revenue after accounting for direct costs of goods sold. This financial cushion typically signals strong pricing power, competitive advantages, and robust unit economics.

Gross Margin > 60%
Operating Margin > 15%
Positive Revenue Growth
Return on Equity > 15%

Why Invest in High Gross Margin Stocks?

Pricing Power

Easily pass rising costs onto consumers.

High Profitability

Generates superior cash flows for reinvestment.

Economic Moat

Signals strong brand equity and competitive advantages.

Market Outperformance

Historically delivers superior risk-adjusted returns.

SCREEN CURATED BY

Anish Das

MBA, IIM Kozhikode · Founder & Individual Investor

5+ years experience

Founder of VCP Scanner, former Flipkart Brand Manager, and active US equity investor focused on transparent research workflows.

Editorial Disclosure: The data in this screener is systematically filtered using transparent rules, ensuring unbiased results. Reviewed for E-E-A-T standards. Not financial advice.

Frequently Asked Questions

Why is 60% the threshold?

60% is the benchmark for software and luxury goods, such as LVMH, which maintain pricing power that prevents margin erosion during recessions.

Does this screen work for retail?

Rarely, as retail margins are typically 20-30%; Costco is an outlier, but even they rarely exceed 15% gross margin.

What if a company has high margins but low ROE?

This suggests poor asset utilization, like Intel in 2023, where high production costs offset gross margin gains.

Are high margins always good?

No, they can attract competition; Netflix's high margins in 2018 invited Disney+ and others, forcing a margin-diluting content spending war.

How do I avoid value traps?

Check if the high margin is declining; if a firm like 3M sees margins drop from 50% to 40% over 3 years, it signals a loss of competitive advantage.

Can I use this for cyclical stocks?

Cyclical stocks like ExxonMobil rarely pass this screen because their margins fluctuate with oil prices, often dropping below 20% in down cycles.

Does this screen favor tech?

Yes, because software companies like Salesforce have near-zero marginal costs, allowing them to consistently hit 75%+ gross margins.

How often should I re-screen?

Quarterly, as seen with companies like Nvidia, whose margins expanded from 60% to 75% in 2023 due to the AI chip demand shift.

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