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 are two growth stocks expanding their competitive advantages and one that could be down big.
One Growth Stock to Sell:
Steven Madden (SHOO)
One-Year Revenue Growth: +18.2%
As seen in the infamous Wolf of Wall Street movie, Steven Madden (NASDAQ:SHOO) is a fashion brand famous for its trendy and innovative footwear, appealing to a young and style-conscious audience.
Why Do We Think SHOO Will Underperform?
- Sales trends were unexciting over the last five years as its 13.4% annual growth was below the typical consumer discretionary company
- Poor free cash flow margin of 6.8% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
At $47.66 per share, Steven Madden trades at 19.2x forward P/E. Read our free research report to see why you should think twice about including SHOO in your portfolio.
Two Growth Stocks to Watch:
Douglas Dynamics (PLOW)
One-Year Revenue Growth: +20.1%
Once manufacturing snowplows designed for the iconic jeep vehicle precursor, Douglas Dynamics (NYSE:PLOW) offers snow and ice equipment for the roads and sidewalks.
Why Are We Fans of PLOW?
- 10.4% annual revenue growth over the last two years surpassed the sector average as its offerings resonated with customers
- Additional sales over the last two years increased its profitability as the 43.6% annual growth in its earnings per share outpaced its revenue
- Free cash flow margin grew by 11 percentage points over the last five years, giving the company more chips to play with
Douglas Dynamics is trading at $41.70 per share, or 13.9x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
The Ensign Group (ENSG)
One-Year Revenue Growth: +20%
Founded in 1999 and named after a naval term for a flag-bearing ship, The Ensign Group (NASDAQ:ENSG) operates skilled nursing facilities, senior living communities, and rehabilitation services across 15 states, primarily serving high-acuity patients recovering from various medical conditions.
Why Could ENSG Be a Winner?
- Impressive 19.1% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Notable projected revenue growth of 18.3% for the next 12 months hints at market share gains
- Earnings per share have massively outperformed its peers over the last five years, increasing by 13.9% annually
The Ensign Group’s stock price of $177.19 implies a valuation ratio of 21.7x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth 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-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.