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 expanding their competitive advantages and one facing an uphill battle.
One Growth Stock to Sell:
Appian (APPN)
One-Year Revenue Growth: +20.9%
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 Cautious About APPN?
- Estimated sales growth of 12.2% for the next 12 months implies demand will slow from its two-year trend
- Extended payback periods on sales investments suggest the company’s platform isn’t resonating enough to drive efficient sales conversions
- Operating margin improvement of 3.4 percentage points over the last year demonstrates its ability to scale efficiently
Appian’s stock price of $40.82 implies a valuation ratio of 3.3x forward price-to-sales. If you’re considering APPN for your portfolio, see our FREE research report to learn more.
Two Growth Stocks to Watch:
Freshworks (FRSH)
One-Year Revenue Growth: +15.6%
Starting as a customer service solution before expanding into a comprehensive software suite, Freshworks (NASDAQ: FRSH) provides AI-powered software-as-a-service solutions that help companies manage customer service, IT support, sales, and marketing functions.
Why Are We Fans of FRSH?
- Annual revenue growth of 24% over the last five years beat the sector average and indicates its software solves complex business issues
- Prominent and differentiated software leads to a top-tier gross margin of 85%
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
At $13.51 per share, Freshworks trades at 3.5x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
DoorDash (DASH)
One-Year Revenue Growth: +33.6%
Founded by Stanford students with the intent to build “the local, on-demand FedEx", DoorDash (NASDAQ: DASH) operates an on-demand food delivery platform.
Why Are We Bullish on DASH?
- Orders have grown by 23.5% annually, allowing for more profitable cross-selling opportunities if it can build complementary products and features
- Highly efficient business model is illustrated by its impressive 20% EBITDA margin, and its rise over the last few years was fueled by some leverage on its fixed costs
- Incremental sales over the last three years have been highly profitable as its earnings per share increased by 98.3% annually, topping its revenue gains
DoorDash is trading at $222.25 per share, or 22.8x forward EV/EBITDA. Is now the time to initiate a position? See for yourself in our comprehensive 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 (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
