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. On that note, here is one growth stock with significant upside potential and two that could be down big.
Two Growth Stocks to Sell:
fuboTV (FUBO)
One-Year Revenue Growth: +13.2%
Originally launched as a soccer streaming platform, fuboTV (NYSE: FUBO) is a video streaming service specializing in live sports, news, and entertainment content.
Why Are We Cautious About FUBO?
- Sluggish trends in its domestic subscribers suggest customers aren’t adopting its solutions as quickly as the company hoped
- Historical operating losses point to an inefficient cost structure
- Projected 10.7 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
fuboTV is trading at $2.44 per share, or 127x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why FUBO doesn’t pass our bar.
Rumble (RUM)
One-Year Revenue Growth: +17.9%
Founded in 2013 as a champion for content creator rights and free expression, Rumble (NASDAQ: RUM) is a video sharing platform that positions itself as a free speech alternative to mainstream platforms, offering creators more favorable revenue-sharing opportunities.
Why Does RUM Worry Us?
- Historically negative EPS casts doubt for cautious investors and clouds its long-term earnings prospects
- 23.7 percentage point decline in its free cash flow margin over the last four years reflects the company’s increased investments to defend its market position
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
At $8.07 per share, Rumble trades at 14.4x forward price-to-sales. To fully understand why you should be careful with RUM, check out our full research report (it’s free).
One Growth Stock to Buy:
Duolingo (DUOL)
One-Year Revenue Growth: +39.1%
Founded by a Carnegie Mellon computer science professor and his Ph.D. student, Duolingo (NASDAQ: DUOL) is a mobile app helping people learn new languages.
Why Are We Bullish on DUOL?
- Has the opportunity to boost monetization through new features and premium offerings as its monthly active users have grown by 39.8% annually over the last two years
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 196% over the last three years outstripped its revenue performance
- DUOL is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its recently improved profitability means it has even more resources to invest or distribute
Duolingo’s stock price of $486.25 implies a valuation ratio of 78.7x forward EV/EBITDA. Is now a good time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.
