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.
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. That said, here is one growth stock where the best is yet to come and two that could be down big.
Two Growth Stocks to Sell:
Applied Digital (APLD)
One-Year Revenue Growth: +33.5%
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 Does APLD Fall Short?
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 83.8% annually
- Free cash flow margin dropped by 54.3 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
At $28.67 per share, Applied Digital trades at 71.4x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including APLD in your portfolio.
Affirm (AFRM)
One-Year Revenue Growth: +37%
Founded by PayPal co-founder Max Levchin with a mission to create honest financial products, Affirm (NASDAQ:AFRM) provides a payment network that allows consumers to make purchases and pay for them over time with transparent, flexible installment loans.
Why Does AFRM Worry Us?
- Negative return on equity shows that some of its growth strategies have backfired
- High net-debt-to-EBITDA ratio of 6× could force the company to raise capital at unfavorable terms if market conditions deteriorate
Affirm’s stock price of $75.30 implies a valuation ratio of 22.3x forward P/E. If you’re considering AFRM for your portfolio, see our FREE research report to learn more.
One Growth Stock to Buy:
Quanta (PWR)
One-Year Revenue Growth: +18.7%
A construction engineering services company, Quanta (NYSE:PWR) provides infrastructure solutions to a variety of sectors, including energy and communications.
Why Are We Bullish on PWR?
- Demand is greater than supply as the company’s 16.7% average backlog growth over the past two years shows it’s securing new contracts and accumulating more orders than it can fulfill
- Projected revenue growth of 12.5% for the next 12 months suggests its momentum from the last two years will persist
- Earnings per share have massively outperformed its peers over the last two years, increasing by 24.3% annually
Quanta is trading at $451.90 per share, or 37.4x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
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