Growth is oxygen. But when it evaporates, the consequences can be extreme - ask anyone who bought Cisco in the Dot-Com Bubble (Nvidia?) or newer investors who lived through the 2020 to 2022 COVID cycle.
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. On that note, here are two growth stocks with significant upside potential and one that could be down big.
One Growth Stock to Sell:
Bandwidth (BAND)
One-Year Revenue Growth: +24.5%
Started in 1999 by David Morken who was later joined by Henry Kaestner as co-founder in 2001, Bandwidth (NASDAQ: BAND) provides thousands of customers with a software platform that uses its own global network to provide phone numbers, voice, and text connectivity.
Why Do We Steer Clear of BAND?
- Annual revenue growth of 15.1% over the last three years was below our standards for the software sector
- Projected sales are flat for the next 12 months, implying demand will slow from its three-year trend
- Gross margin of 37.4% reflects its high servicing costs
At $15.09 per share, Bandwidth trades at 0.6x forward price-to-sales. To fully understand why you should be careful with BAND, check out our full research report (it’s free).
Two Growth Stocks to Buy:
Broadcom (AVGO)
One-Year Revenue Growth: +40.3%
Originally the semiconductor division of Hewlett Packard, Broadcom (NASDAQ: AVGO) is a semiconductor conglomerate spanning wireless communications, networking, and data storage as well as infrastructure software focused on mainframes and cybersecurity.
Why Are We Bullish on AVGO?
- Market share has increased this cycle as its 25.9% annual revenue growth over the last two years was exceptional
- Superior product capabilities and pricing power lead to a best-in-class gross margin of 75.4%
- Robust free cash flow margin of 41.9% gives it many options for capital deployment
Broadcom is trading at $189.06 per share, or 28.4x forward price-to-earnings. Is now a good time to buy? See for yourself in our full research report, it’s free.
HEICO (HEI)
One-Year Revenue Growth: +23.1%
Founded in 1957, HEICO (NYSE: HEI) manufactures and services aerospace and electronic components for commercial aviation, defense, space, and other industries.
Why Will HEI Outperform?
- Average organic revenue growth of 9.6% over the past two years demonstrates its ability to expand independently without relying on acquisitions
- Earnings per share grew by 24.9% annually over the last two years, massively outpacing its peers
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
HEICO’s stock price of $261.70 implies a valuation ratio of 59.1x forward price-to-earnings. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
With rates dropping, inflation stabilizing, and the elections in the rearview mirror, all signs point to the start of a new bull run - and we’re laser-focused on finding the best stocks for this upcoming cycle.
Put yourself in the driver’s seat by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.
