Growth is oxygen. But when it evaporates, the consequences can be severe - ask anyone who bought Cisco in the Dot-Com Bubble or newer investors who lived through the 2020 to 2022 COVID cycle.
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 is one growth stock with significant upside potential and two whose momentum may slow.
Two Growth Stocks to Sell:
Semtech (SMTC)
One-Year Revenue Growth: +15.5%
A public company since the late 1960s, Semtech (NASDAQ: SMTC) is a provider of analog and mixed-signal semiconductors used for Internet of Things systems and cloud connectivity.
Why Do We Avoid SMTC?
- Expenses have increased as a percentage of revenue over the last five years as its operating margin fell by 16.5 percentage points
- 7.6 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
- Push for growth has led to negative returns on capital, signaling value destruction, and its decreasing returns suggest its historical profit centers are aging
Semtech is trading at $122 per share, or 55x forward P/E. If you’re considering SMTC for your portfolio, see our FREE research report to learn more.
Renasant (RNST)
One-Year Revenue Growth: +62.5%
Founded in 1904 during a time when the South was rebuilding its economy, Renasant (NYSE: RNST) is a regional bank holding company that offers banking, wealth management, insurance, and specialized lending services throughout the Southeast.
Why Does RNST Fall Short?
- Annual revenue growth of 9.4% over the last five years was below our standards for the banking sector
- Performance over the past five years shows its incremental sales were less profitable, as its 5% annual earnings per share growth trailed its revenue gains
- Annual tangible book value per share growth of 3.5% over the last two years was below our standards for the banking sector
At $40.19 per share, Renasant trades at 0.9x forward P/B. Check out our free in-depth research report to learn more about why RNST doesn’t pass our bar.
One Growth Stock to Watch:
ServisFirst Bancshares (SFBS)
One-Year Revenue Growth: +20%
Founded in 2005 with a focus on serving underserved mid-sized businesses, ServisFirst Bancshares (NYSE: SFBS) is a bank holding company that provides commercial banking services to businesses and professionals through its subsidiary ServisFirst Bank.
Why Do We Like SFBS?
- Market share has increased this cycle as its 17.5% annual revenue growth over the last two years was exceptional
- Net interest margin increased by 53.2 basis points (100 basis points = 1 percentage point) over the last two years, giving the firm more capital to invest or return to shareholders
- Annual tangible book value per share growth of 13.1% over the past five years was outstanding, reflecting strong capital accumulation this cycle
ServisFirst Bancshares’s stock price of $79.52 implies a valuation ratio of 2.1x forward P/B. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it's flagging for this month - FREE. Get Our Top 5 Growth Stocks for Free HERE.
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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
