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.
Deciphering which businesses can sustain their high growth rates is a challenge for even the most seasoned professionals, which is why we started StockStory. On that note, here are two growth stocks where the best is yet to come and one that could be down big.
One Growth Stock to Sell:
First American Financial (FAF)
One-Year Revenue Growth: +20.7%
Tracing its roots back to 1889 when California was experiencing its first major real estate boom, First American Financial (NYSE: FAF) provides title insurance, settlement services, and risk solutions for residential and commercial real estate transactions across the United States and internationally.
Why Do We Pass on FAF?
- Sales trends were unexciting over the last five years as its 1.2% annual growth was below the typical insurance company
- Net premiums earned plateaued over the last five years, signaling weak incremental demand for its insurance policies
- Earnings per share were flat over the last five years and fell short of the peer group average
First American Financial’s stock price of $62.10 implies a valuation ratio of 1.1x forward P/B. Dive into our free research report to see why there are better opportunities than FAF.
Two Growth Stocks to Watch:
Palantir Technologies (PLTR)
One-Year Revenue Growth: +47.2%
Named after the all-seeing stones in "Lord of the Rings," Palantir Technologies (NASDAQ: PLTR) develops software platforms that help government agencies and enterprises integrate, analyze, and operationalize their data for decision-making.
Why Are We Bullish on PLTR?
- Winning new contracts that can potentially increase in value as its billings growth has averaged 52.2% over the last year
- Well-designed software integrates seamlessly with other workflows, enabling swift payback periods on marketing expenses and customer growth at scale
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Palantir Technologies is trading at $183.80 per share, or 83.7x forward price-to-sales. Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
LSI (LYTS)
One-Year Revenue Growth: +22.3%
Enhancing commercial environments, LSI (NASDAQ: LYTS) provides lighting and display solutions for businesses and retailers.
Why Do We Like LYTS?
- Impressive 15.6% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Operating margin improvement of 2.8 percentage points over the last five years demonstrates its ability to scale efficiently
- Earnings per share have massively outperformed its peers over the last five years, increasing by 50.7% annually
At $18.68 per share, LSI trades at 15.1x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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 Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.
