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.
Luckily for you, our job at StockStory is to help you avoid short-term fads by pointing you toward high-quality businesses that can generate sustainable long-term growth. On that note, here are three growth stocks climbing an uphill battle and some other opportunities you should consider instead.
Herc (HRI)
One-Year Revenue Growth: +19.4%
Formerly a subsidiary of Hertz Corporation and with a logo that still bears some similarities to its former parent, Herc Holdings (NYSE:HRI) provides equipment rental and related services to a wide range of industries.
Why Do We Think Twice About HRI?
- Earnings per share fell by 15.2% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
- 9.4 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
- 6× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
At $159.91 per share, Herc trades at 22.1x forward P/E. Check out our free in-depth research report to learn more about why HRI doesn’t pass our bar.
Applied Digital (APLD)
One-Year Revenue Growth: +66.7%
Pivoting from its origins in cryptocurrency mining to become a key player in the AI infrastructure boom, Applied Digital (NASDAQ:APLD) designs and operates specialized data centers that provide high-performance computing infrastructure for artificial intelligence and blockchain applications.
Why Are We Cautious About APLD?
- Flat earnings per share over the last three years underperformed the sector average
- 79.8 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
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
Applied Digital’s stock price of $37.42 implies a valuation ratio of 72.2x forward EV-to-EBITDA. To fully understand why you should be careful with APLD, check out our full research report (it’s free).
FB Financial (FBK)
One-Year Revenue Growth: +21.2%
Founded in 1906 and operating through more than a century of economic cycles, FB Financial (NYSE:FBK) operates FirstBank, providing commercial and consumer banking services across Tennessee, Kentucky, Alabama, and North Georgia.
Why Does FBK Give Us Pause?
- 1.9% annual revenue growth over the last five years was slower than its banking peers
- Earnings growth over the last five years fell short of the peer group average as its EPS only increased by 2.4% annually
- Annual tangible book value per share growth of 8.6% over the last two years was below our standards for the banking sector
FB Financial is trading at $56.90 per share, or 1.5x forward P/B. Read our free research report to see why you should think twice about including FBK in your portfolio.
Stocks We Like More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.