1 Growth Stock with Explosive Upside and 2 We Turn Down

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.

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. Keeping that in mind, here is one growth stock expanding its competitive advantage and two climbing an uphill battle.

Two Growth Stocks to Sell:

CAVA (CAVA)

One-Year Revenue Growth: +23.9%

Starting from a single Washington, D.C. location, CAVA (NYSE:CAVA) operates a fast-casual restaurant chain offering customizable Mediterranean-inspired dishes.

Why Are We Wary of CAVA?

1. Operating margin of 4.6% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
2. Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
3. Push for growth has led to negative returns on capital, signaling value destruction

CAVA’s stock price of $63.74 implies a valuation ratio of 109.2x forward P/E. To fully understand why you should be careful with CAVA, check out our full research report (it’s free for active Edge members).

Enphase (ENPH)

One-Year Revenue Growth: +21%

The first company to successfully commercialize the solar micro-inverter, Enphase (NASDAQ:ENPH) manufactures software-driven home energy products.

Why Do We Steer Clear of ENPH?

1. Declining unit sales over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
2. Earnings per share have dipped by 22.7% annually over the past two years, which is concerning because stock prices follow EPS over the long term
3. Free cash flow margin shrank by 9.2 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive

Enphase is trading at $34.14 per share, or 16.4x forward P/E. If you’re considering ENPH for your portfolio, see our FREE research report to learn more.

One Growth Stock to Buy:

Houlihan Lokey (HLI)

One-Year Revenue Growth: +21%

Founded in 1972 and known for its expertise in complex financial situations, Houlihan Lokey (NYSE:HLI) is a global investment bank specializing in mergers and acquisitions, capital markets, financial restructurings, and valuation advisory services.

Why Will HLI Beat the Market?

1. Market share has increased this cycle as its 19.9% annual revenue growth over the last two years was exceptional
2. Incremental sales over the last two years have been highly profitable as its earnings per share increased by 33.5% annually, topping its revenue gains
3. Impressive 42.9% annual tangible book value per share growth over the last two years indicates it’s building equity value this cycle

At $182.58 per share, Houlihan Lokey trades at 21.8x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.

High-Quality Stocks for All Market Conditions

Check out the high-quality names we’ve flagged in our Top 5 Strong Momentum 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.