Remove stock android apps via file manager I have a rooted HTC One (M8). I want to remove some pre installed apps like Play Newsstand, Play Movies, Fitbit etc.

I tried uninstalling them using System App Remover by jumobile, and Titanium Backup.
But after uninstalling, even removing the backup of the app, and then rebooting my phone, I find the app still there and it opens and works too. I deleted the apk of an app that was the factory version. So it's apk was not there in /data/app, I checked. So basically it reappeared in /system/app after reboot.

I read somewhere that if I delete the app folder in /system/app via root file explorer then the app will be uninstalled. Is this method ok? Or are there drawbacks? And if its fine, will it work on Android Lollipop?

If there is any workaround or alternate method, please suggest.
Assuming your HTC One is running Sense, it sounds like your phone is S-ON (locked). Naturally, with S-ON, any change you make to the system will be undone on the next reboot.

I'm not sure if there's a working S-OFF (unlock) method available for your device, as a quick Google search turned up varied results for S-OFF methods on the M8. Take a look at SunShine S-OFF, if you want.

If you don't want to go that way or if your phone's already S-OFF, you may want to try Titanium Backup's "Bloatware Melter" feature (TB menu > Preferences... > Bloatware Melter) specifically made for NAND-locked devices.

You can also try to delete the app files themselves inside /system/app and/or /system/priv-app, like you said; but do be careful if you do this - you might accidentally delete something else.