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.
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. Keeping that in mind, here are two growth stocks with significant upside potential and one that could be down big.
One Growth Stock to Sell:
Palo Alto Networks (PANW)
One-Year Revenue Growth: +24.5%
Founded in 2005 by security visionary Nir Zuk who sought to reimagine firewall technology, Palo Alto Networks (NASDAQ: PANW) provides AI-powered cybersecurity platforms that protect organizations' networks, clouds, and endpoints from sophisticated threats.
Why Are We Cautious About PANW?
- Gross margin of 70.4% reflects its relatively high servicing costs
- Long payback periods on sales and marketing expenses limit customer growth and signal the company operates in a highly competitive environment
- Operating margin dropped by 7.4 percentage points over the last year as the company focused on expansion rather than profitability
At $363.43 per share, Palo Alto Networks trades at 21.6x forward price-to-sales. If you’re considering PANW for your portfolio, see our FREE research report to learn more.
Two Growth Stocks to Watch:
Veeva Systems (VEEV)
One-Year Revenue Growth: +16.5%
Originally named "Verticals onDemand" before rebranding in 2009, Veeva Systems (NYSE: VEEV) provides cloud software, data solutions, and consulting services that help life sciences companies develop and bring products to market more efficiently.
Why Are We Positive on VEEV?
- Billings have averaged 17.8% growth over the last year, showing it’s securing new contracts that could potentially increase in value over time
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Veeva Systems is trading at $261.60 per share, or 11.1x forward price-to-sales. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Astec (ASTE)
One-Year Revenue Growth: +18.7%
Inventing the first ever double-barrel hot-mix asphalt plant, Astec (NASDAQ: ASTE) provides machines and equipment for building roads, processing raw materials, and producing concrete.
Why Do We Like ASTE?
- 9.6% annual revenue growth over the last two years surpassed the sector average as its offerings resonated with customers
- Operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
- Additional sales over the last two years increased its profitability as the 27.9% annual growth in its earnings per share outpaced its revenue
Astec’s stock price of $41.41 implies a valuation ratio of 11x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating 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-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
