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. On that note, here are two growth stocks with significant upside potential and one whose momentum may slow.
One-Year Revenue Growth: +16.9%
Founded during the 2009 financial crisis when many banks were failing, Veritex Holdings (NASDAQGM:VBTX) operates Veritex Community Bank, providing commercial and retail banking services to small and medium-sized businesses and professionals in Texas.
Why Does VBTX Worry Us?
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Sales were flat over the last two years, indicating it’s failed to expand this cycle
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Estimated net interest income growth of 5.3% for the next 12 months implies demand will slow from its five-year trend
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Earnings per share fell by 14% annually over the last two years while its revenue was flat, showing each sale was less profitable
Veritex Holdings is trading at $30.14 per share, or 3.9x trailing 12-month price-to-sales. Read our free research report to see why you should think twice about including VBTX in your portfolio, it’s free for active Edge members.
One-Year Revenue Growth: +28.9%
Started in 1992 by two brothers as a single pushcart, Dutch Bros (NYSE:BROS) is a dynamic coffee chain that’s captured the hearts of coffee enthusiasts across the United States.
Why Do We Love BROS?
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Fast expansion of new restaurants to reach markets with few or no locations is justified by its same-store sales growth
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Same-store sales growth over the past two years shows it’s successfully drawing diners into its restaurants
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Notable projected revenue growth of 23.7% for the next 12 months hints at market share gains
At $55.80 per share, Dutch Bros trades at 65.2x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
One-Year Revenue Growth: +38.6%
Founded in 1818 as one of America’s oldest mutual banks before converting to a public company in 2020, Eastern Bankshares (NASDAQ:EBC) operates as a bank holding company providing commercial and retail banking services primarily in Massachusetts, New Hampshire, and Rhode Island.
Why Do We Like EBC?
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Market share has increased this cycle as its 14.7% annual net interest income growth over the last five years was exceptional
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Non-interest operating profits increased over the last five years as the firm gained some leverage on its fixed costs and became more efficient
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Earnings growth has trumped its peers over the last two years as its EPS has compounded at 6.4% annually