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 are precisely why we started StockStory — to isolate the long-term winners from the losers so you can invest with confidence. That said, here are two growth stocks expanding their competitive advantages and one whose momentum may slow.
One Growth Stock to Sell:
Appian (APPN)
One-Year Revenue Growth: +20.4%
Powering billions of transactions daily since its founding in 1999, Appian (NASDAQ: APPN) provides a low-code platform that helps businesses automate complex processes and operationalize artificial intelligence without extensive programming knowledge.
Why Are We Hesitant About APPN?
- Estimated sales growth of 10.5% for the next 12 months implies demand will slow from its two-year trend
- Customer acquisition costs take a while to recoup, making it difficult to justify sales and marketing investments that could increase revenue
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
At $20.90 per share, Appian trades at 1.8x forward price-to-sales. To fully understand why you should be careful with APPN, check out our full research report (it’s free).
Two Growth Stocks to Buy:
Monolithic Power Systems (MPWR)
One-Year Revenue Growth: +23.9%
Founded in 1997 by its longtime CEO Michael Hsing, Monolithic Power Systems (NASDAQ: MPWR) is an analog and mixed signal chipmaker that specializes in power management chips meant to minimize total energy consumption.
Why Are We Bullish on MPWR?
- Annual revenue growth of 25.9% over the past five years was outstanding, reflecting market share gains this cycle
- Incremental sales over the last five years have been highly profitable as its earnings per share increased by 27.7% annually, topping its revenue gains
- ROIC punches in at 43%, illustrating management’s expertise in identifying profitable investments
Monolithic Power Systems’s stock price of $1,404 implies a valuation ratio of 56.2x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Sterling (STRL)
One-Year Revenue Growth: +37%
Involved in the construction of a major highway, the Grand Parkway in Houston, TX, Sterling Infrastructure (NASDAQ: STRL) provides civil infrastructure construction.
Why Will STRL Outperform?
- Annual revenue growth of 19.8% over the past two years was outstanding, reflecting market share gains this cycle
- 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
- Rising returns on capital show management is finding more attractive investment opportunities
Sterling is trading at $880.60 per share, or 45.2x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating 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.
