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.
Deciphering which businesses can sustain their high growth rates is a challenge for even the most seasoned professionals, which is why we started StockStory. Keeping that in mind, here are two growth stocks expanding their competitive advantages and one that could be down big.
One-Year Revenue Growth: +53.7%
Pivoting from its origins in cryptocurrency mining to become a key player in the AI infrastructure boom, Applied Digital (NASDAQ:APLD) designs and operates specialized data centers that provide high-performance computing infrastructure for artificial intelligence and blockchain applications.
Why Are We Hesitant About APLD?
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Historically negative EPS casts doubt for cautious investors and clouds its long-term earnings prospects
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Negative free cash flow raises questions about the return timeline for its investments
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Short cash runway increases the probability of a capital raise that dilutes existing shareholders
Applied Digital’s stock price of $10.62 implies a valuation ratio of 18.4x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than APLD.
One-Year Revenue Growth: +22.8%
Started by Oleg Shchegolev while still in university, Semrush (NYSE:SEMR) is a software-as-a-service platform that helps companies optimize their search engine and content marketing efforts.
Why Are We Positive On SEMR?
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Average billings growth of 24.8% over the last year enhances its liquidity and shows there is steady demand for its products
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Estimated revenue growth of 18.7% for the next 12 months implies its momentum over the last three years will continue
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Software is difficult to replicate at scale and leads to a stellar gross margin of 82.1%
Semrush is trading at $8.97 per share, or 2.9x forward price-to-sales. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
One-Year Revenue Growth: +59.2%
Pioneering treatments for a devastating childhood muscle-wasting disease that primarily affects boys, Sarepta Therapeutics (NASDAQ:SRPT) develops and commercializes RNA-targeted therapies and gene therapies for rare genetic disorders, primarily Duchenne muscular dystrophy.
Why Is SRPT a Top Pick?
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Annual revenue growth of 51.3% over the last two years was superb and indicates its market share increased during this cycle
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Earnings growth has trumped its peers over the last five years as its EPS has compounded at 38.8% annually
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Cash-burning tendencies have improved over the last five years, showing it could become financially independent one day