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.
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. Keeping that in mind, here are two growth stocks expanding their competitive advantages and one that could be down big.
One Growth Stock to Sell:
Viavi Solutions (VIAV)
One-Year Revenue Growth: +30.6%
Once known as JDS Uniphase before its 2015 rebranding, Viavi Solutions (NASDAQ: VIAV) provides testing, monitoring and assurance solutions for telecommunications, cloud, enterprise, military, and other critical networks and infrastructure.
Why Does VIAV Worry Us?
- Sales trends were unexciting over the last five years as its 3.4% annual growth was below the typical industrials company
- Performance over the past five years shows its incremental sales were less profitable as its earnings per share were flat
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Viavi Solutions is trading at $49.47 per share, or 42.1x forward P/E. If you’re considering VIAV for your portfolio, see our FREE research report to learn more.
Two Growth Stocks to Watch:
Cloudflare (NET)
One-Year Revenue Growth: +31.6%
With a massive network spanning more than 310 cities in over 120 countries, Cloudflare (NYSE: NET) provides a global network that delivers security, performance and reliability services to protect websites, applications, and corporate networks.
Why Are We Backing NET?
- Average billings growth of 34.2% over the last year enhances its liquidity and shows there is steady demand for its products
- Notable projected revenue growth of 28.4% for the next 12 months hints at market share gains
- User-friendly software enables clients to ramp up spending quickly, leading to the speedy recovery of customer acquisition costs
At $201.89 per share, Cloudflare trades at 23.3x forward price-to-sales. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Dutch Bros (BROS)
One-Year Revenue Growth: +28.4%
Started in 1992 by two brothers as a single pushcart, Dutch Bros (NYSE: BROS) is a dynamic coffee chain that’s captured the hearts of coffee enthusiasts across the United States.
Why Is BROS Interesting?
- Fast expansion of new restaurants to reach markets with few or no locations is justified by its same-store sales growth
- Customers are lining up to eat at its restaurants as the company’s same-store sales growth averaged 5.8% over the past two years
- Free cash flow margin increased by 2.8 percentage points over the last year, giving the company more capital to invest or return to shareholders
Dutch Bros’s stock price of $52.83 implies a valuation ratio of 50.8x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum - both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week's Strong Momentum stocks - FREE. Get Our Strong Momentum 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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
