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. Keeping that in mind, here are two growth stocks where the best is yet to come and one whose momentum may slow.
One Growth Stock to Sell:
Life Time (LTH)
One-Year Revenue Growth: +18.2%
With over 150 locations and gyms that include saunas and steam rooms, Life Time (NYSE: LTH) is an upscale fitness club emphasizing holistic well-being and fitness.
Why Are We Wary of LTH?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
- Cash-burning history makes us doubt the long-term viability of its business model
- High net-debt-to-EBITDA ratio of 6× increases the risk of forced asset sales or dilutive financing if operational performance weakens
Life Time is trading at $32.39 per share, or 27.9x forward P/E. Read our free research report to see why you should think twice about including LTH in your portfolio.
Two Growth Stocks to Watch:
KLA Corporation (KLAC)
One-Year Revenue Growth: +20.3%
Formed by the 1997 merger of the two leading semiconductor yield management companies, KLA Corporation (NASDAQ: KLAC) is the leading supplier of equipment used to measure and inspect semiconductor chips.
Why Do We Love KLAC?
- Impressive 15.6% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Healthy operating margin of 35.9% shows it’s a well-run company with efficient processes, and it turbocharged its profits by achieving some fixed cost leverage
- Robust free cash flow margin of 31.2% gives it many options for capital deployment
KLA Corporation’s stock price of $697.25 implies a valuation ratio of 22.1x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Intuitive Surgical (ISRG)
One-Year Revenue Growth: +19.1%
Pioneering minimally invasive surgery since its first da Vinci system was FDA-cleared in 2000, Intuitive Surgical (NASDAQ: ISRG) develops and manufactures robotic-assisted surgical systems that enable minimally invasive procedures across various medical specialties.
Why Does ISRG Catch Our Eye?
- Products are reaching more customers as its system placement averaged 11.8% growth over the past two years
- Projected revenue growth of 14.8% for the next 12 months suggests its momentum from the last two years will persist
- Earnings growth has comfortably beaten the peer group average over the last five years as its EPS has compounded at 12.3% annually
At $528.99 per share, Intuitive Surgical trades at 63.1x forward P/E. Is now a good time to buy? Find out in our full 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 6 Stocks for this week. 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 Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.
