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.
The risks that can come from buying these assets are precisely why we started StockStory — to isolate the long-term winners from the losers so you can invest with confidence. Keeping that in mind, here is one growth stock with significant upside potential and two facing an uphill battle.
Two Growth Stocks to Sell:
Transcat (TRNS)
One-Year Revenue Growth: +20.9%
Serving the pharmaceutical, industrial manufacturing, energy, and chemical process industries, Transcat (NASDAQ: TRNS) provides measurement instruments and supplies.
Why Are We Hesitant About TRNS?
- Revenue growth over the past two years was nullified by the company’s new share issuances as its earnings per share fell by 15.9% annually
- ROIC of 6.9% reflects management’s challenges in identifying attractive investment opportunities, and its falling returns suggest its earlier profit pools are drying up
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Transcat is trading at $85.89 per share, or 44.6x forward P/E. To fully understand why you should be careful with TRNS, check out our full research report (it’s free).
Bunge Global (BG)
One-Year Revenue Growth: +80.5%
With origins dating back to 1818 and operations spanning both hemispheres to balance seasonal harvests, Bunge Global (NYSE: BG) is an agribusiness and food company that processes oilseeds, grains, and other agricultural commodities into vegetable oils, protein meals, flours, and specialty ingredients.
Why Is BG Not Exciting?
- Sales are projected to remain flat over the next 12 months as demand decelerates from its three-year trend
- Gross margin of 5.4% is an output of its commoditized products
- Incremental sales over the last three years were much less profitable as its earnings per share fell by 16% annually while its revenue grew
At $109.05 per share, Bunge Global trades at 10.1x forward P/E. Check out our free in-depth research report to learn more about why BG doesn’t pass our bar.
One Growth Stock to Buy:
Diamondback Energy (FANG)
One-Year Revenue Growth: +21.4%
Sporting one of Wall Street's most memorable ticker symbols, Diamondback Energy (NASDAQ: FANG) drills for and produces oil and natural gas from underground rock formations in the Permian Basin of West Texas and New Mexico.
Why Should You Buy FANG?
- Impressive 44.7% annual revenue growth over the last ten years indicates it’s winning market share this cycle
- Attractive asset base leads to wonderful unit economics and a best-in-class gross margin of 79.8%
- FANG is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
Diamondback Energy’s stock price of $186.42 implies a valuation ratio of 9.9x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth 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 (+1,460% 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.
