1 Growth Stock to Target This Week and 2 to Turn Down

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.

Deciphering which businesses can sustain their high growth rates is a challenge for even the most seasoned professionals, which is why we started StockStory. That said, here is one growth stock where the best is yet to come and two that could be down big.

Two Growth Stocks to Sell:

Sprout Social (SPT)

1-Year Revenue Growth: +21.7%

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 Are We Cautious About SPT?

1. Historical operating losses show it had an inefficient cost structure while scaling
2. Low free cash flow margin of 5.8% for the last year gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders

Sprout Social is trading at $26.61 per share, or 3.4x forward price-to-sales. To fully understand why you should be careful with SPT, check out our full research report (it’s free).

EverQuote (EVER)

1-Year Revenue Growth: +73.7%

Aiming to simplify a once complicated process, EverQuote (NASDAQ:EVER) is an online insurance marketplace where consumers can compare and purchase various types of insurance from different providers

Why Are We Hesitant About EVER?

1. Lackluster 6.1% annual revenue growth over the last three years indicates the company is losing ground to competitors
2. Expensive marketing campaigns hurt its profitability and make us wonder what would happen if it let up on the gas

At $25.10 per share, EverQuote trades at 14.7x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including EVER in your portfolio.

One Growth Stock to Buy:

BellRing Brands (BRBR)

1-Year Revenue Growth: +21%

Spun out of Post Holdings in 2019, Bellring Brands (NYSE:BRBR) offers protein shakes, nutrition bars, and other products under the PowerBar, Premier Protein, and Dymatize brands.

Why Are We Bullish on BRBR?

1. Unit sales were phenomenal over the past two years, showing demand is robust and retailers can’t stock enough of its products
2. Earnings growth has trumped its peers over the last three years as its EPS has compounded at 30.9% annually
3. ROIC punches in at 50.2%, illustrating management’s expertise in identifying profitable investments

BellRing Brands’s stock price of $71.56 implies a valuation ratio of 31.6x forward price-to-earnings. Is now the time to initiate a position? Find out in our full research report, it’s free.

Stocks We Like Even More

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