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 Growth Stock to Sell:
U.S. Physical Therapy (USPH)
One-Year Revenue Growth: +17.5%
With a nationwide footprint spanning 671 clinics across 42 states, U.S. Physical Therapy (NYSE:USPH) operates a network of outpatient physical therapy clinics and provides industrial injury prevention services to employers across the United States.
Why Are We Wary of USPH?
- Subscale operations are evident in its revenue base of $758.7 million, meaning it has fewer distribution channels than its larger rivals
- 8.6 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
- Waning returns on capital imply its previous profit engines are losing steam
U.S. Physical Therapy is trading at $75.58 per share, or 26.1x forward P/E. Read our free research report to see why you should think twice about including USPH in your portfolio.
Two Growth Stocks to Buy:
Datadog (DDOG)
One-Year Revenue Growth: +26.6%
Named after a database the founders had to painstakingly look after at their previous company, Datadog (NASDAQ:DDOG) provides a software platform that helps organizations monitor and secure their cloud applications, infrastructure, and services.
Why Is DDOG a Good Business?
- Customers view its software as mission-critical to their operations as its ARR has averaged 26.5% growth over the last year
- Forecasted revenue growth of 21.6% for the next 12 months indicates its momentum over the last two years is sustainable
- Well-designed software integrates seamlessly with other workflows, enabling swift payback periods on marketing expenses and customer growth at scale
At $191.31 per share, Datadog trades at 17.7x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
Eli Lilly (LLY)
One-Year Revenue Growth: +45.4%
Founded in 1876 by a Civil War veteran and pharmacist frustrated with the poor quality of medicines, Eli Lilly (NYSE:LLY) discovers, develops, and manufactures pharmaceutical products for conditions including diabetes, obesity, cancer, immunological disorders, and neurological diseases.
Why Is LLY a Top Pick?
- Market share has increased this cycle as its 36.1% annual revenue growth over the last two years was exceptional
- Adjusted operating profits increased over the last two years as the company gained some leverage on its fixed costs and became more efficient
- Share buybacks catapulted its annual earnings per share growth to 29.5%, which outperformed its revenue gains over the last five years
Eli Lilly’s stock price of $923.97 implies a valuation ratio of 31x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .
High-Quality Stocks for All Market Conditions
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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
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