Growth boosts valuation multiples, but it doesn’t always last forever. Companies that cannot maintain it are often penalized with large declines in market value, a lesson ingrained in investors who lost money in tech stocks during 2022.
Deciphering which businesses can sustain their high growth rates is a challenge for even the most seasoned professionals, which is why we started StockStory. Keeping that in mind, here are two growth stocks where the best is yet to come and one that could be down big.
One Growth Stock to Sell:
Rocket Companies (RKT)
One-Year Revenue Growth: +39.9%
Born in Detroit during the 1980s and evolving into a tech-driven financial powerhouse, Rocket Companies (NYSE: RKT) is a fintech company that provides digital mortgage lending, real estate services, and personal finance solutions through its technology platform.
Why Are We Cautious About RKT?
- Sales tumbled by 16.5% annually over the last five years, showing market trends are working against its favor during this cycle
- Projected net interest income decline of 10.6% over the next 12 months signals that demand will deteriorate
- Sales were less profitable over the last five years as its earnings per share fell by 43.4% annually, worse than its revenue declines
Rocket Companies is trading at $14.37 per share, or 1.6x forward P/B. Read our free research report to see why you should think twice about including RKT in your portfolio.
Two Growth Stocks to Watch:
Analog Devices (ADI)
One-Year Revenue Growth: +25.9%
Founded by two MIT graduates, Ray Stata and Matthew Lorber in 1965, Analog Devices (NASDAQ: ADI) is one of the largest providers of high performance analog integrated circuits used mainly in industrial end markets, along with communications, autos, and consumer devices.
Why Are We Positive On ADI?
- Impressive 14.9% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Offerings are mission-critical for businesses and lead to a stellar gross margin of 60.3%
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its rising cash conversion increases its margin of safety
Analog Devices’s stock price of $314.75 implies a valuation ratio of 25.9x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Graham Corporation (GHM)
One-Year Revenue Growth: +19%
Founded when its founder patented a unique design for a vacuum system used in the sugar refining process, Graham (NYSE: GHM) provides vacuum and heat transfer equipment for the energy, petrochemical, refining, and chemical sectors.
Why Will GHM Outperform?
- Market share has increased this cycle as its 15% annual revenue growth over the last two years was exceptional
- Earnings per share have massively outperformed its peers over the last one years, increasing by 83.3% annually
- Free cash flow margin increased by 15.4 percentage points over the last five years, giving the company more capital to invest or return to shareholders
At $84.11 per share, Graham Corporation trades at 43.7x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it's flagging for this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
