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. On that note, here is one growth stock expanding its competitive advantage and two facing an uphill battle.
Two Growth Stocks to Sell:
Ollie's (OLLI)
One-Year Revenue Growth: +16.7%
Often located in suburban or semi-rural shopping centers, Ollie’s Bargain Outlet (NASDAQ: OLLI) is a discount retailer that acquires excess inventory then sells at meaningful discounts.
Why Are We Wary of OLLI?
- Smaller revenue base of $2.73 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Static operating margin over the last year shows it couldn’t become more efficient
- Low returns on capital reflect management’s struggle to allocate funds effectively
Ollie’s stock price of $76.96 implies a valuation ratio of 17x forward P/E. If you’re considering OLLI for your portfolio, see our FREE research report to learn more.
Rocket Companies (RKT)
One-Year Revenue Growth: +81.2%
Born in Detroit during the 1980s and evolving into a tech-driven financial powerhouse, Rocket Companies (NYSE: RKT) is a fintech company that provides digital mortgage lending, real estate services, and personal finance solutions through its technology platform.
Why Does RKT Fall Short?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 9.5% annually over the last five years
- Sales were less profitable over the last five years as its earnings per share fell by 33.3% annually, worse than its revenue declines
- Below-average return on equity indicates management struggled to find compelling investment opportunities
Rocket Companies is trading at $14.81 per share, or 1.8x forward P/B. Check out our free in-depth research report to learn more about why RKT doesn’t pass our bar.
One Growth Stock to Buy:
Pinterest (PINS)
One-Year Revenue Growth: +16.6%
Created with the idea of virtually replacing paper catalogues, Pinterest (NYSE: PINS) is an online image and social discovery platform.
Why Is PINS a Good Business?
- Monthly Active Users are rising, meaning the company can increase revenue without incurring additional customer acquisition costs if it can cross-sell additional products and features
- Additional sales over the last three years increased its profitability as the 36.4% annual growth in its earnings per share outpaced its revenue
- PINS is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its rising cash conversion increases its margin of safety
At $24.02 per share, Pinterest trades at 17x forward EV/EBITDA. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
