Growth boosts valuation multiples, but it doesn’t always last forever. Companies that cannot maintain it are often penalized with large declines in market value, a lesson ingrained in investors who lost money in tech stocks during 2022.
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. That said, here is one growth stock expanding its competitive advantage and two that could be down big.
Two Growth Stocks to Sell:
Upstart (UPST)
One-Year Revenue Growth: +73.3%
Using over 2,500 data variables and trained on nearly 82 million repayment events, Upstart (NASDAQ: UPST) is an AI-powered lending platform that uses machine learning to help banks and credit unions more accurately assess borrower risk for personal loans, auto loans, and home equity lines of credit.
Why Does UPST Worry Us?
- Extended payback periods on sales investments suggest the company’s platform isn’t resonating enough to drive efficient sales conversions
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Upstart is trading at $39 per share, or 3.5x forward price-to-sales. Check out our free in-depth research report to learn more about why UPST doesn’t pass our bar.
Bel Fuse (BELFA)
One-Year Revenue Growth: +23.7%
Founded by 26-year-old Elliot Bernstein during the electronics boom after WW2, Bel Fuse (NASDAQ: BELF.A) provides electronic systems and devices to the telecommunications, networking, transportation, and industrial sectors.
Why Are We Cautious About BELFA?
- Sales tumbled by 1.5% annually over the last two years, showing market trends are working against its favor during this cycle
- Earnings per share have contracted by 6.9% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
At $131.68 per share, Bel Fuse trades at 20.6x forward P/E. To fully understand why you should be careful with BELFA, check out our full research report (it’s free for active Edge members).
One Growth Stock to Buy:
Aris Water (ARIS)
One-Year Revenue Growth: +16.4%
Primarily serving the oil and gas industry, Aris Water (NYSE: ARIS) is a provider of water handling and recycling solutions.
Why Should You Buy ARIS?
- Annual revenue growth of 23.8% over the past five years was outstanding, reflecting market share gains this cycle
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 56.2% outpaced its revenue gains
- Free cash flow margin expanded by 38.4 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
Aris Water’s stock price of $23.60 implies a valuation ratio of 1.7x trailing 12-month price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check 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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