Growth is a hallmark of all great companies, but the laws of gravity eventually take hold. Those who rode the COVID boom and ensuing tech selloff in 2022 will surely remember that the market’s punishment can be swift and severe when trajectories fall.
The risks that can come from buying these assets is precisely why we started StockStory - to isolate the long-term winners from the losers so you can invest with confidence. On that note, here is one growth stock expanding its competitive advantage and two climbing an uphill battle.
Two Growth Stocks to Sell:
Compass (COMP)
One-Year Revenue Growth: +15.2%
Fueled by its mission to replace the "paper-driven, antiquated workflow" of buying a house, Compass (NYSE:COMP) is a digital-first company operating a residential real estate brokerage in the United States.
Why Do We Think Twice About COMP?
- Annual sales declines of 3.3% for the past two years show its products and services struggled to connect with the market
- Number of principal agents has disappointed over the past two years, indicating weak demand for its offerings
- Persistent operating losses suggest the business manages its expenses poorly
Compass is trading at $7.72 per share, or 59.4x forward price-to-earnings. To fully understand why you should be careful with COMP, check out our full research report (it’s free).
Applied Digital (APLD)
One-Year Revenue Growth: +53.7%
Pivoting from its origins in cryptocurrency mining to become a key player in the AI infrastructure boom, Applied Digital (NASDAQ:APLD) designs and operates specialized data centers that provide high-performance computing infrastructure for artificial intelligence and blockchain applications.
Why Does APLD Give Us Pause?
- Historically negative EPS is a worrisome sign for conservative investors and obscures its long-term earnings potential
- Cash-burning history makes us doubt the long-term viability of its business model
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
At $4.61 per share, Applied Digital trades at 7.9x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than APLD.
One Growth Stock to Buy:
Deckers (DECK)
One-Year Revenue Growth: +19.5%
Established in 1973, Deckers (NYSE:DECK) is a footwear and apparel conglomerate with a portfolio of lifestyle and performance brands.
Why Should You Buy DECK?
- 18% annual revenue growth over the last five years surpassed the sector average as its brand resonated with consumers
- Free cash flow margin is expected to increase by 2.9 percentage points next year, suggesting the company will have more capital to invest or return to shareholders
- Returns on capital are growing as management capitalizes on its market opportunities
Deckers’s stock price of $111.40 implies a valuation ratio of 17.4x forward price-to-earnings. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.