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. That said, here is one growth stock expanding its competitive advantage and two climbing an uphill battle.
Two Growth Stocks to Sell:
Western Digital (WDC)
One-Year Revenue Growth: +38.1%
Founded in 1970 by a Motorola employee, Western Digital (NASDAQ: WDC) is a leading producer of hard disk drives, SSDs and flash memory.
Why Does WDC Worry Us?
- Annual sales declines of 9.4% for the past five years show its products and services struggled to connect with the market during this cycle
- High input costs result in an inferior gross margin of 14.9% that must be offset through higher volumes
- Underwhelming 6.6% return on capital reflects management’s difficulties in finding profitable growth opportunities
At $154.37 per share, Western Digital trades at 19.9x forward P/E. To fully understand why you should be careful with WDC, check out our full research report (it’s free for active Edge members).
Newmark (NMRK)
One-Year Revenue Growth: +21%
Founded in 1929, Newmark (NASDAQ:NMRK) provides commercial real estate services, including leasing advisory, global corporate services, investment sales and capital markets, property and facilities management, valuation and advisory, and consulting.
Why Do We Avoid NMRK?
- 10.3% annual revenue growth over the last five years was slower than its consumer discretionary peers
- Cash-burning history makes us doubt the long-term viability of its business model
- Returns on capital haven’t budged, indicating management couldn’t drive additional value creation
Newmark’s stock price of $17.77 implies a valuation ratio of 9.8x forward P/E. If you’re considering NMRK for your portfolio, see our FREE research report to learn more.
One Growth Stock to Buy:
JFrog (FROG)
One-Year Revenue Growth: +22.7%
Named after the amphibian that continuously evolves from egg to tadpole to adult, JFrog (NASDAQ:FROG) provides a platform that helps organizations securely create, store, manage, and distribute software packages across any system.
Why Should You Buy FROG?
- Winning new contracts that can potentially increase in value as its billings growth has averaged 22.9% 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
JFrog is trading at $62.89 per share, or 12.3x forward price-to-sales. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free for active Edge members.
Stocks We Like Even More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Growth Stocks for this month. 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-micro-cap company Kadant (+351% 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
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