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. On that note, here are two growth stocks expanding their competitive advantages and one facing an uphill battle.
One Growth Stock to Sell:
Lemonade (LMND)
One-Year Revenue Growth: +62.3%
Built on the principle of giving back unused premiums to charitable causes selected by policyholders, Lemonade (NYSE: LMND) is a technology-driven insurance company that offers homeowners, renters, pet, car, and life insurance through an AI-powered digital platform.
Why Are We Cautious About LMND?
- Performance over the past five years shows its incremental sales were less profitable, as its 8% annual earnings per share growth trailed its revenue gains
- Book value per share tumbled by 18.4% annually over the last five years, showing insurance sector trends are working against it during this cycle
- Push for growth has led to negative returns on capital, signaling value destruction
Lemonade’s stock price of $52.06 implies a valuation ratio of 8.3x forward P/B. Dive into our free research report to see why there are better opportunities than LMND.
Two Growth Stocks to Buy:
Cloudflare (NET)
One-Year Revenue Growth: +33.5%
With a massive network spanning more than 310 cities in over 120 countries, Cloudflare (NYSE: NET) provides a global network that delivers security, performance and reliability services to protect websites, applications, and corporate networks.
Why Will NET Outperform?
- Billings have averaged 34.7% growth over the last year, showing it’s securing new contracts that could potentially increase in value over time
- Revenue outlook for the upcoming 12 months is outstanding and shows it’s on track to gain market share
- Well-designed software integrates seamlessly with other workflows, enabling swift payback periods on marketing expenses and customer growth at scale
Cloudflare is trading at $330.56 per share, or 31.8x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
CLEAR Secure (YOU)
One-Year Revenue Growth: +19.8%
Recognized by its signature blue lanes and biometric pods at airport checkpoints across America, CLEAR Secure (NYSE: YOU) provides biometric identity verification technology that allows subscribers to bypass regular security lines at airports and access secure experiences at various venues.
Why Should You Buy YOU?
- Impressive 36% annual revenue growth over the last five years indicates it’s winning market share
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
At $53.04 per share, CLEAR Secure trades at 4.9x forward price-to-sales. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is 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% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. 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 (+1,460% 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.
