3 Growth Stocks with Questionable Fundamentals

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.

Deciphering which businesses can sustain their high growth rates is a challenge for even the most seasoned professionals, which is why we started StockStory. On that note, here are three growth stocks whose momentum may slow and some other opportunities you should look into instead.

Micron (MU)

One-Year Revenue Growth: +71.1%

Founded in the basement of a Boise, Idaho dental office in 1978, Micron (NYSE:MU) is a leading provider of memory chips used in thousands of devices across mobile, data centers, industrial, consumer, and automotive markets.

Why Are We Cautious About MU?

1. Gross margin of 21.8% reflects its high production costs
2. Operating margin of 4.1% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
3. Cash-burning tendencies make us wonder if it can sustainably generate shareholder value

At $116.18 per share, Micron trades at 13.3x forward P/E. To fully understand why you should be careful with MU, check out our full research report (it’s free).

Paycor (PYCR)

One-Year Revenue Growth: +15.7%

Founded in 1990 in Cincinnati, Ohio, Paycor (NASDAQ: PYCR) provides software for small businesses to manage their payroll and HR needs in one place.

Why Does PYCR Give Us Pause?

1. Estimated sales growth of 9.6% for the next 12 months implies demand will slow from its three-year trend
2. Gross margin of 66% reflects its relatively high servicing costs
3. Suboptimal cost structure is highlighted by its history of operating margin losses

Paycor’s stock price of $22.49 implies a valuation ratio of 5.3x forward price-to-sales. Check out our free in-depth research report to learn more about why PYCR doesn’t pass our bar.

RTX (RTX)

One-Year Revenue Growth: +15.1%

Originally focused on refrigeration technology, Raytheon (NSYE:RTX) provides a a variety of products and services to the aerospace and defense industries.

Why Do We Think Twice About RTX?

1. Estimated sales growth of 4% for the next 12 months implies demand will slow from its two-year trend
2. Performance over the past five years was negatively impacted by new share issuances as its earnings per share were flat while its revenue grew
3. Below-average returns on capital indicate management struggled to find compelling investment opportunities

RTX is trading at $141.85 per share, or 22.6x forward P/E. If you’re considering RTX for your portfolio, see our FREE research report to learn more.

High-Quality Stocks for All Market Conditions

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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.