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 is precisely why we started StockStory - to isolate the long-term winners from the losers so you can invest with confidence. That said, here are three growth stocks whose momentum may slow and some other opportunities you should look into instead.
Sunrun (RUN)
One-Year Revenue Growth: +45.1%
Helping homeowners use solar energy to power their homes, Sunrun (NASDAQ: RUN) provides residential solar electricity, specializing in panel installation and leasing services.
Why Does RUN Fall Short?
- Suboptimal cost structure is highlighted by its history of operating margin losses
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- High net-debt-to-EBITDA ratio of 23× could force the company to raise capital at unfavorable terms if market conditions deteriorate
Sunrun’s stock price of $13.02 implies a valuation ratio of 34.6x forward P/E. Check out our free in-depth research report to learn more about why RUN doesn’t pass our bar.
Guardant Health (GH)
One-Year Revenue Growth: +32.9%
Pioneering the field of "liquid biopsy" with technology that can identify cancer-specific genetic mutations from a simple blood draw, Guardant Health (NASDAQ: GH) develops blood tests that detect and monitor cancer by analyzing tumor DNA in the bloodstream, helping doctors make treatment decisions without invasive biopsies.
Why Are We Cautious About GH?
- Modest revenue base of $982 million means it has less operating leverage but can also grow faster if it executes the right sales strategy
- Negative free cash flow raises questions about the return timeline for its investments
- Unprofitable operations could lead to additional rounds of dilutive equity financing if the credit window closes
At $86.60 per share, Guardant Health trades at 8.5x forward price-to-sales. Read our free research report to see why you should think twice about including GH in your portfolio.
Root (ROOT)
One-Year Revenue Growth: +29%
Pioneering a data-driven approach that rewards good driving habits, Root (NASDAQ: ROOT) is a technology-driven auto insurance company that uses mobile apps to acquire customers and data science to price policies based on individual driving behavior.
Why Are We Wary of ROOT?
- Book value per share tumbled by 24.6% annually over the last five years, showing insurance sector trends are working against its favor during this cycle
- Negative return on equity shows that some of its growth strategies have backfired
Root is trading at $46.47 per share, or 2x forward P/B. Dive into our free research report to see why there are better opportunities than ROOT.
Stocks We Like More
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.
