Growth is oxygen. But when it evaporates, the consequences can be severe - ask anyone who bought Cisco in the Dot-Com Bubble or newer investors who lived through the 2020 to 2022 COVID cycle.
Luckily for you, our job at StockStory is to help you avoid short-term fads by pointing you toward high-quality businesses that can generate sustainable long-term growth. That said, here are two growth stocks expanding their competitive advantages and one whose momentum may slow.
One Growth Stock to Sell:
Herc (HRI)
One-Year Revenue Growth: +19.4%
Formerly a subsidiary of Hertz Corporation and with a logo that still bears some similarities to its former parent, Herc Holdings (NYSE: HRI) provides equipment rental and related services to a wide range of industries.
Why Is HRI Not Exciting?
- Incremental sales over the last two years were much less profitable as its earnings per share fell by 15.2% annually while its revenue grew
- 9.4 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
- 6× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Herc’s stock price of $138.82 implies a valuation ratio of 18.5x forward P/E. Check out our free in-depth research report to learn more about why HRI doesn’t pass our bar.
Two Growth Stocks to Buy:
Lam Research (LRCX)
One-Year Revenue Growth: +25.7%
Founded in 1980 by David Lam, the man who pioneered semiconductor etching technology, Lam Research (NASDAQ: LRCX) is one of the leading providers of wafer fabrication equipment used to make semiconductors.
Why Is LRCX a Top Pick?
- Impressive 11.2% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Free cash flow margin jumped by 9.4 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
At $165 per share, Lam Research trades at 33.7x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
GE Aerospace (GE)
One-Year Revenue Growth: +22%
One of the original 12 companies on the Dow Jones Industrial Average, General Electric (NYSE: GE) is a multinational conglomerate providing technologies for various sectors including aviation, power, renewable energy, and healthcare.
Why Are We Bullish on GE?
- Annual revenue growth of 15.2% over the last two years was superb and indicates its market share increased during this cycle
- Strong free cash flow margin of 19.4% enables it to reinvest or return capital consistently
- Returns on capital are growing as management capitalizes on its market opportunities
GE Aerospace is trading at $305.40 per share, or 45.5x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .
High-Quality Stocks for All Market Conditions
Fresh US-China trade tensions just tanked stocks—but strong bank earnings are fueling a sharp rebound. Don’t miss the bounce.
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 Kadant (+351% 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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