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.

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. On that note, here are two growth stocks with significant upside potential and one whose momentum may slow.

One Growth Stock to Sell:

Transcat (TRNS)

One-Year Revenue Growth: +17.4%

Serving the pharmaceutical, industrial manufacturing, energy, and chemical process industries, Transcat (NASDAQ: TRNS) provides measurement instruments and supplies.

Why Are We Wary of TRNS?

1. Efficiency has decreased over the last five years as its operating margin fell by 2.8 percentage points
2. Issuance of new shares over the last two years caused its earnings per share to fall by 6.8% annually while its revenue grew
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

Transcat is trading at $83.30 per share, or 40.9x forward P/E. To fully understand why you should be careful with TRNS, check out our full research report (it’s free).

Two Growth Stocks to Buy:

Guidewire Software (GWRE)

One-Year Revenue Growth: +23.7%

With its systems powering the operations of hundreds of insurance brands across 42 countries, Guidewire Software (NYSE: GWRE) provides a technology platform that helps property and casualty insurance companies manage their core operations, digital engagement, and analytics.

Why Should You Buy GWRE?

1. Winning new contracts that can potentially increase in value as its billings growth has averaged 21.1% over the last year
2. Well-designed software integrates seamlessly with other workflows, enabling swift payback periods on marketing expenses and customer growth at scale
3. Free cash flow margin of 21.9% is higher than many in the industry, giving it breathing room and optionality

Guidewire Software’s stock price of $126.63 implies a valuation ratio of 6.5x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.

Coterra Energy (CTRA)

One-Year Revenue Growth: +33.1%

Operating some of the country's largest natural gas wells in Pennsylvania's Marcellus Shale, Coterra Energy (NYSE: CTRA) drills for and produces oil, natural gas, and natural gas liquids from underground shale formations.

Why Will CTRA Beat the Market?

1. Market share has increased this cycle as its 18.5% annual revenue growth over the last ten years was exceptional
2. Attractive asset base leads to wonderful unit economics and a best-in-class gross margin of 79.1%
3. Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends

At $33.08 per share, Coterra Energy trades at 11.9x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.

Stocks We Like Even More

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 (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.