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 are three growth stocks whose momentum may slow and some other opportunities you should look into instead.
Procore (PCOR)
One-Year Revenue Growth: +18.6%
Used to manage the multi-year expansion of the Panama Canal that began in 2007, Procore (NYSE: PCOR) offers a software-as-service project, finance, and quality management platform for the construction industry.
Why Does PCOR Fall Short?
- Track record of operating margin losses stem from its decision to pursue growth instead of profits
- Poor free cash flow margin of 9.8% for the last year limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
Procore is trading at $71.52 per share, or 8.1x forward price-to-sales. To fully understand why you should be careful with PCOR, check out our full research report (it’s free).
ANI Pharmaceuticals (ANIP)
One-Year Revenue Growth: +30.3%
With a diverse portfolio of 116 pharmaceutical products and a growing rare disease platform, ANI Pharmaceuticals (NASDAQ: ANIP) develops, manufactures, and markets branded and generic prescription pharmaceuticals, with a focus on rare disease treatments.
Why Are We Wary of ANIP?
- Subscale operations are evident in its revenue base of $674.1 million, meaning it has fewer distribution channels than its larger rivals
- Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 7 percentage points
- Negative returns on capital show management lost money while trying to expand the business
ANI Pharmaceuticals’s stock price of $64.84 implies a valuation ratio of 10.1x forward P/E. Dive into our free research report to see why there are better opportunities than ANIP.
Grid Dynamics (GDYN)
One-Year Revenue Growth: +18.7%
With engineering centers across the Americas, Europe, and India serving Fortune 1000 companies, Grid Dynamics (NASDAQ: GDYN) provides technology consulting, engineering, and analytics services to help large enterprises modernize their technology systems and business processes.
Why Do We Think Twice About GDYN?
- Revenue base of $371.2 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Incremental sales over the last two years were much less profitable as its earnings per share fell by 8.5% annually while its revenue grew
- Negative returns on capital show that some of its growth strategies have backfired
At $12.86 per share, Grid Dynamics trades at 31.3x forward P/E. Read our free research report to see why you should think twice about including GDYN in your portfolio.
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 6 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
