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.
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 is one growth stock where the best is yet to come and two climbing an uphill battle.
Two Growth Stocks to Sell:
Sprout Social (SPT)
One-Year Revenue Growth: +17.8%
Founded by Justyn Howard and Aaron Rankin in 2010, Sprout Social (NASDAQ: SPT) provides a software as a service platform that companies can use to schedule and respond to posts on major social media networks like Twitter, Facebook, Instagram, Youtube and LinkedIn.
Why Do We Think Twice About SPT?
- Operating losses show it sacrificed profitability while scaling the business
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 7.6% for the last year
Sprout Social’s stock price of $24.15 implies a valuation ratio of 3x forward price-to-sales. Read our free research report to see why you should think twice about including SPT in your portfolio.
RXO (RXO)
One-Year Revenue Growth: +32.4%
With access to millions of trucks, RXO (NYSE: RXO) offers full-truckload, less-than-truckload, and last-mile deliveries.
Why Should You Dump RXO?
- 6.2% annual revenue growth over the last two years was slower than its industrials peers
- Earnings per share fell by 38.4% annually over the last four years while its revenue grew, showing its incremental sales were much less profitable
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
At $17.14 per share, RXO trades at 60.7x forward P/E. Check out our free in-depth research report to learn more about why RXO doesn’t pass our bar.
One Growth Stock to Buy:
Reddit (RDDT)
One-Year Revenue Growth: +64.1%
Founded in 2005 by two University of Virginia roommates, Reddit (NYSE: RDDT) facilitates user-generated content across niche communities (called subreddits) that discuss anything from stocks to dating and memes.
Why Will RDDT Beat the Market?
- Has the opportunity to boost monetization through new features and premium offerings as its domestic daily active visitors have grown by 33.5% annually over the last two years
- Earnings per share have massively outperformed its peers over the last two years, increasing by 79.8% annually
- Free cash flow margin jumped by 38.9 percentage points over the last few years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Reddit is trading at $125.00 per share, or 40.5x forwarpl'0d EV/EBITDA. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.
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.
