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.
Deciphering which businesses can sustain their high growth rates is a challenge for even the most seasoned professionals, which is why we started StockStory. That said, here is one growth stock expanding its competitive advantage and two facing an uphill battle.
Two growth stocks to sell:
Applied Digital (APLD)
One-year revenue growth: +251%
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 Is APLD Not Exciting?
- Modest revenue base of $872.3 million means it has less operating leverage but can also grow faster if it executes the right sales strategy
- Free cash flow margin dropped by 109.6 percentage points over the last five years, implying the company increased its investment activities to fend off competitors
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
Applied Digital is trading at $14.74 per share, or 17.6x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why APLD doesn’t pass our bar.
Radian Group (RDN)
One-year revenue growth: +66.2%
Founded during the housing boom of 1977 and weathering multiple real estate cycles since, Radian Group (NYSE: RDN) provides mortgage insurance and real estate services, helping lenders manage risk and homebuyers achieve affordable homeownership.
Why Does RDN Worry Us?
- Costs have risen faster than its revenue over the last five years, causing its pre-tax profit margin to decline by 14.4 percentage points
- Performance over the past two years shows its incremental sales were less profitable, as its 11% annual earnings per share growth trailed its revenue gains
- Annual book value per share growth of 6.8% over the last two years was below our standards for the insurance sector
Radian Group’s stock price of $37.65 implies a valuation ratio of 1x forward P/B. To fully understand why you should be careful with RDN, check out our full research report (it’s free).
One growth stock to watch:
Apple (AAPL)
One-year revenue growth: +15.1%
Creator of the iPhone and App Store, Apple (NASDAQ: AAPL) is a legendary developer of consumer electronics and software.
Why Does AAPL Catch Our Eye?
- Apple’s revenue base is so large because nearly everyone in the U.S. has an iPhone, but this is a double-edged sword. Growth must now come from upgrades, a harder pitch that has resulted in sluggish top-line performance recently.
- Still, Apple’s devices have endured for decades, speaking to its brand, design ethos, and technological chops. Its success is rare in the world of consumer electronics, which is fraught because of commoditization, competition, and obsolescence risk.
- The company may not have the best gross margin because of its hardware orientation, but it still manages to produce elite operating and free cash flow margins. This shows it doesn’t need over-the-top marketing campaigns to convince people to buy its products.
At $343.28 per share, Apple trades at 37.5x forward price-to-earnings. Is now the right time to buy? Find out in our full 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 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 (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
