Growth is oxygen. But when it evaporates, the consequences can be severe - ask anyone who bought Cisco in the Dot-Com Bubble or newer investors who lived through the 2020 to 2022 COVID cycle.
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. Keeping that in mind, here is one growth stock expanding its competitive advantage and two climbing an uphill battle.
Two Growth Stocks to Sell:
CAVA (CAVA)
One-Year Revenue Growth: +23.9%
Starting from a single Washington, D.C. location, CAVA (NYSE: CAVA) operates a fast-casual restaurant chain offering customizable Mediterranean-inspired dishes.
Why Are We Wary of CAVA?
- Operating margin of 4.6% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
- Push for growth has led to negative returns on capital, signaling value destruction
CAVA’s stock price of $63.74 implies a valuation ratio of 109.2x forward P/E. To fully understand why you should be careful with CAVA, check out our full research report (it’s free for active Edge members).
Enphase (ENPH)
One-Year Revenue Growth: +21%
The first company to successfully commercialize the solar micro-inverter, Enphase (NASDAQ: ENPH) manufactures software-driven home energy products.
Why Do We Steer Clear of ENPH?
- Declining unit sales over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
- Earnings per share have dipped by 22.7% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Free cash flow margin shrank by 9.2 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Enphase is trading at $34.14 per share, or 16.4x forward P/E. If you’re considering ENPH for your portfolio, see our FREE research report to learn more.
One Growth Stock to Buy:
Houlihan Lokey (HLI)
One-Year Revenue Growth: +21%
Founded in 1972 and known for its expertise in complex financial situations, Houlihan Lokey (NYSE: HLI) is a global investment bank specializing in mergers and acquisitions, capital markets, financial restructurings, and valuation advisory services.
Why Will HLI Beat the Market?
- Market share has increased this cycle as its 19.9% annual revenue growth over the last two years was exceptional
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 33.5% annually, topping its revenue gains
- Impressive 42.9% annual tangible book value per share growth over the last two years indicates it’s building equity value this cycle
At $182.58 per share, Houlihan Lokey trades at 21.8x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
Check out the high-quality names we’ve flagged in our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.
