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 is one growth stock where the best is yet to come and two whose momentum may slow.
Two Growth Stocks to Sell:
Orion (ORN)
One-Year Revenue Growth: +15.9%
Established in 1994, Orion (NYSE: ORN) provides construction services for marine infrastructure and industrial projects.
Why Do We Pass on ORN?
- Backlog has dropped by 1.7% on average over the past two years, suggesting it’s losing orders as competition picks up
- Gross margin of 9.3% is below its competitors, leaving less money to invest in areas like marketing and R&D
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
Orion’s stock price of $7.51 implies a valuation ratio of 64.6x forward P/E. If you’re considering ORN for your portfolio, see our FREE research report to learn more.
Provident Financial Services (PFS)
One-Year Revenue Growth: +65%
Founded in 1839 and serving communities across New Jersey, Pennsylvania, and New York, Provident Financial Services (NYSE: PFS) operates a regional bank providing commercial, residential, and consumer lending alongside wealth management and insurance services.
Why Does PFS Give Us Pause?
- Weak unit economics are reflected in its net interest margin of 3.2%, one of the worst among bank companies
- Earnings per share fell by 7.1% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
- Flat tangible book value per share over the last five years suggest it must find different ways to enhance shareholder value during this cycle
Provident Financial Services is trading at $18.47 per share, or 0.9x forward P/B. Dive into our free research report to see why there are better opportunities than PFS.
One Growth Stock to Buy:
Ares (ARES)
One-Year Revenue Growth: +21.4%
With roots in the leveraged finance group of Apollo Management, Ares Management (NYSE: ARES) is an alternative investment firm that manages private equity, credit, real estate, and infrastructure assets for institutional and high-net-worth clients.
Why Do We Love ARES?
- Market share has increased this cycle as its 19.8% annual revenue growth over the last five years was exceptional
- 32.8% annual growth in fee-related earnings over the last five years shows the firm optimized its expenses
- Earnings growth has easily exceeded the peer group average over the last five years as its EPS has compounded at 17.3% annually
At $139.50 per share, Ares trades at 25x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
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Don’t let fear keep you from great opportunities and take a look at Top 5 Strong Momentum 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).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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