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 are two growth stocks with significant upside potential and one that could be down big.
One Growth Stock to Sell:
Elastic (ESTC)
One-Year Revenue Growth: +16.2%
Built on the powerful open-source Elasticsearch technology that powers search functionality for thousands of websites worldwide, Elastic (NYSE: ESTC) provides a search and AI platform that helps organizations find insights from their data, monitor applications, and protect against security threats.
Why Are We Wary of ESTC?
- Products, pricing, or go-to-market strategy may need some adjustments as its 14% average billings growth over the last year was weak
- Customer acquisition costs are recovered fairly quickly, allowing the company to invest in growth initiatives
- Operating margin failed to increase over the last year, indicating the company couldn’t optimize its expenses
Elastic is trading at $96.86 per share, or 4.5x forward price-to-sales. If you’re considering ESTC for your portfolio, see our FREE research report to learn more.
Two Growth Stocks to Watch:
Western Digital (WDC)
One-Year Revenue Growth: +35.7%
Founded in 1970 by a Motorola employee, Western Digital (NASDAQ: WDC) is a leading producer of hard disk drives, SSDs and flash memory.
Why Does WDC Stand Out?
- Projected revenue growth of 48.3% for the next 12 months indicates demand will rise above its two-year trend
- Operating margin improved by 21.7 percentage points over the last five years as it eliminated redundant costs
- Free cash flow margin expanded by 23.1 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
Western Digital’s stock price of $440.60 implies a valuation ratio of 22.1x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
EMCOR (EME)
One-Year Revenue Growth: +18.9%
Through its network of over 70 subsidiaries, EMCOR (NYSE: EME) provides electrical, mechanical, and building construction and services
Why Will EME Outperform?
- Market share has increased this cycle as its 16.3% annual revenue growth over the last two years was exceptional
- Share repurchases over the last two years enabled its annual earnings per share growth of 35.7% to outpace its revenue gains
- Improving returns on capital reflect management’s ability to monetize investments
At $746.90 per share, EMCOR trades at 21.1x 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
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 meet 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 (+1,460% 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.
