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. On that note, here is one growth stock expanding its competitive advantage and two facing an uphill battle.
Two Growth Stocks to Sell:
ThredUp (TDUP)
One-Year Revenue Growth: +20.4%
Founded to revolutionize thrifting, ThredUp (NASDAQ:TDUP) is a leading online fashion resale marketplace offering a wide selection of gently-used clothing and accessories.
Why Is TDUP Risky?
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Number of orders has disappointed over the past two years, indicating weak demand for its offerings
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Persistent operating margin losses suggest the business manages its expenses poorly
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Low free cash flow margin of -0.5% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
ThredUp’s stock price of $5.79 implies a valuation ratio of 32.3x forward EV-to-EBITDA. If you’re considering TDUP for your portfolio, see our FREE research report to learn more.
Golar LNG (GLNG)
One-Year Revenue Growth: +83.8%
Pioneering a way to monetize stranded gas reserves that would otherwise be uneconomical to develop, Golar LNG (NASDAQ:GLNG) converts ships into floating liquefied natural gas facilities that liquefy natural gas at offshore sites.
Why Does GLNG Fall Short?
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Sales trends were unexciting over the last five years as its 2.8% annual growth was below the typical energy upstream and integrated energy company
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Cash-burning history makes us doubt the long-term viability of its business model
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Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
At $48.98 per share, Golar LNG trades at 432.2x forward P/E. Dive into our free research report to see why there are better opportunities than GLNG.
One Growth Stock to Buy:
Atlassian (TEAM)
One-Year Revenue Growth: +24.7%
Started by two Australian university friends who funded their startup with credit cards, Atlassian (NASDAQ:TEAM) provides software tools that help teams plan, track, collaborate, and share knowledge across organizations.
Why Is TEAM a Top Pick?
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Annual revenue growth of 21.9% over the past two years was outstanding, reflecting market share gains
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Prominent and differentiated software culminates in a premier gross margin of 84.8%
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Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently