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.
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 three growth stocks whose best days may be over and some alternatives you should consider instead.
Bandwidth (BAND)
One-Year Revenue Growth: +18.5%
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 Should You Sell BAND?
- Annual revenue growth of 13.9% over the last three years was below our standards for the software sector
- Estimated sales growth of 2.8% for the next 12 months implies demand will slow from its three-year trend
- Gross margin of 38% reflects its high servicing costs
Bandwidth’s stock price of $15.50 implies a valuation ratio of 0.6x forward price-to-sales. Check out our free in-depth research report to learn more about why BAND doesn’t pass our bar.
Agilysys (AGYS)
One-Year Revenue Growth: +16.1%
Originally a subsidiary of Pioneer-Standard Electronics that distributed electronic components, Agilysys (NASDAQ: AGYS) offers a software-as-service platform that helps hotels, resorts, restaurants, and other hospitality businesses manage their operations and workflows.
Why Are We Hesitant About AGYS?
- Revenue increased by 19.2% annually over the last three years, acceptable on an absolute basis but tepid for a software company enjoying secular tailwinds
- Gross margin of 62.4% is below its competitors, leaving less money to invest in areas like marketing and R&D
- Capital intensity will likely increase as its free cash flow margin is anticipated to drop by 1.2 percentage points over the next year
At $114.62 per share, Agilysys trades at 10.4x forward price-to-sales. If you’re considering AGYS for your portfolio, see our FREE research report to learn more.
MDU Resources (MDU)
One-Year Revenue Growth: +26.8%
Founded to provide electricity to towns in Minnesota, MDU Resources (NYSE: MDU) provides products and services in the utilities and construction materials industries.
Why Do We Steer Clear of MDU?
- Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
- Poor free cash flow margin of 0.5% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- 5× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
MDU Resources is trading at $16.83 per share, or 16.2x forward P/E. Dive into our free research report to see why there are better opportunities than MDU.
Stocks We Like More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Growth Stocks for this month. 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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