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 are two growth stocks expanding their competitive advantages and one facing an uphill battle.
One Growth Stock to Sell:
GEO Group (GEO)
One-Year Revenue Growth: +15.3%
With a global footprint spanning three continents and approximately 81,000 beds across 100 facilities, GEO Group (NYSE:GEO) operates secure facilities, processing centers, and reentry services for government agencies in the United States, Australia, and South Africa.
Why Does GEO Give Us Pause?
- Muted 4.2% annual revenue growth over the last five years shows its demand lagged behind its business services peers
- Costs have risen faster than its revenue over the last five years, causing its adjusted operating margin to decline by 3.7 percentage points
- 7.4 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
GEO Group is trading at $30.44 per share, or 21x forward P/E. To fully understand why you should be careful with GEO, check out our full research report (it’s free).
Two Growth Stocks to Watch:
MACOM (MTSI)
One-Year Revenue Growth: +28.4%
Founded in the 1950s as Microwave Associates, a communications supplier to the US Army Signal Corp, today MACOM Technology Solutions (NASDAQ: MTSI) is a provider of analog chips used in optical, wireless, and satellite networks.
Why Could MTSI Be a Winner?
- Annual revenue growth of 30.9% over the last two years was superb and indicates its market share increased during this cycle
- Sales outlook for the upcoming 12 months calls for 49.9% growth, an acceleration from its two-year trend
- Earnings per share grew by 18.1% annually over the last five years, comfortably beating the peer group average
MACOM’s stock price of $252.91 implies a valuation ratio of 31.8x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
BWX (BWXT)
One-Year Revenue Growth: +22.7%
Contributing components and materials to the famous Manhattan Project in the 1940s, BWX (NYSE:BWXT) is a manufacturer and service provider of nuclear components and fuel for government and commercial industries.
Why Will BWXT Outperform?
- Annual revenue growth of 16.2% over the past two years was outstanding, reflecting market share gains this cycle
- Revenue outlook for the upcoming 12 months is outstanding and shows it’s on track to gain market share
- Free cash flow margin grew by 6.1 percentage points over the last five years, giving the company more chips to play with
At $157.26 per share, BWX trades at 32.1x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum 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 Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.