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.
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 is one growth stock with significant upside potential and two that could be down big.
Two Growth Stocks to Sell:
Addus HomeCare (ADUS)
One-Year Revenue Growth: +15.9%
Serving approximately 66,000 clients across 22 states with a focus on "dual eligible" Medicare and Medicaid beneficiaries, Addus HomeCare (NASDAQ:ADUS) provides in-home personal care, hospice, and home health services to elderly, chronically ill, and disabled individuals.
Why Is ADUS Not Exciting?
- Smaller revenue base of $1.48 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Free cash flow margin didn’t grow over the last five years
- ROIC hasn’t moved, making investors question whether its recent investments can increase profitability
Addus HomeCare is trading at $118.28 per share, or 15.9x forward P/E. If you’re considering ADUS for your portfolio, see our FREE research report to learn more.
Ellington Financial (EFC)
One-Year Revenue Growth: +44.8%
Operating under the guidance of Ellington Management Group, a respected name in structured credit markets, Ellington Financial (NYSE:EFC) acquires and manages a diverse portfolio of mortgage-related, consumer-related, and other financial assets to generate returns for investors.
Why Are We Out on EFC?
- Annual earnings per share growth of 4.6% underperformed its revenue over the last five years, showing its incremental sales were less profitable
- Annual tangible book value per share declines of 5.9% for the past five years show its capital management struggled during this cycle
- Underwhelming 6.7% return on equity reflects management’s difficulties in finding profitable growth opportunities
At $13.29 per share, Ellington Financial trades at 1x forward P/B. To fully understand why you should be careful with EFC, check out our full research report (it’s free).
One Growth Stock to Watch:
Globus Medical (GMED)
One-Year Revenue Growth: +19.7%
With operations spanning 64 countries and a portfolio of over 10 new products launched in 2023 alone, Globus Medical (NYSE:GMED) develops and sells implantable devices, surgical instruments, and technology solutions for spine, orthopedic, and neurosurgical procedures.
Why Does GMED Stand Out?
- Steady constant currency growth over the past two years shows the company can pursue its global ambitions, even in uncertain economic times
- Earnings per share grew by 18.3% annually over the last five years, massively outpacing its peers
- Free cash flow margin jumped by 8 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Globus Medical’s stock price of $80 implies a valuation ratio of 15.8x 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
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating 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.