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 is one growth stock expanding its competitive advantage and two climbing an uphill battle.
Two Growth Stocks to Sell:
Insteel (IIIN)
One-Year Revenue Growth: +26.2%
Growing from a small wire manufacturer to one of the largest in the U.S., Insteel (NYSE: IIIN) provides steel wire reinforcing products for concrete.
Why Are We Wary of IIIN?
- Annual revenue growth of 5.9% over the last two years was below our standards for the industrials sector
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 8.3 percentage points
- Eroding returns on capital suggest its historical profit centers are aging
At $32.76 per share, Insteel trades at 12x forward P/E. Dive into our free research report to see why there are better opportunities than IIIN.
Penumbra (PEN)
One-Year Revenue Growth: +17.5%
Founded in 2004 to address challenging medical conditions with significant unmet needs, Penumbra (NYSE: PEN) develops and manufactures innovative medical devices for treating vascular diseases and providing immersive healthcare rehabilitation solutions.
Why Are We Hesitant About PEN?
- Modest revenue base of $1.40 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
Penumbra’s stock price of $335.21 implies a valuation ratio of 66.4x forward P/E. To fully understand why you should be careful with PEN, check out our full research report (it’s free).
One Growth Stock to Buy:
GitLab (GTLB)
One-Year Revenue Growth: +25.8%
With its all-remote workforce pioneering a new approach to software development, GitLab (NASDAQ: GTLB) provides a single-application DevSecOps platform that helps development, operations, and security teams collaborate to build, secure, and deploy software faster.
Why Do We Love GTLB?
- Ability to secure long-term commitments with customers is evident in its 26.4% ARR growth over the last year
- Net revenue retention rate of 120% shows the company enjoys some degree of customer loyalty
- Prominent and differentiated software results in a best-in-class gross margin of 87.4%
GitLab is trading at $23.05 per share, or 3.5x forward price-to-sales. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
