Growth boosts valuation multiples, but it doesn’t always last forever. Companies that cannot maintain it are often penalized with large declines in market value, a lesson ingrained in investors who lost money in tech stocks during 2022.
The risks that can come from buying these assets are 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 expanding their competitive advantages.
Robinhood (HOOD)
One-Year Revenue Growth: +38.3%
With a mission to democratize finance, Robinhood (NASDAQ:HOOD) is an online consumer finance platform known for its commission-free stock and crypto trading.
Why Should You Buy HOOD?
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Switching costs of its platform were on full display over the last two years as it not only grew engagement but also increased the average revenue per user by 91.2% annually
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Share repurchases have amplified shareholder returns as its annual earnings per share growth of 395% exceeded its revenue gains over the last three years
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Robust free cash flow margin of 55% gives it many options for capital deployment
Robinhood’s stock price of $91.14 implies a valuation ratio of 27.3x forward EV/EBITDA. Is now the time to initiate a position? Find out in our full research report, it’s free.
Natera (NTRA)
One-Year Revenue Growth: +37.8%
Founded in 2003 as Gene Security Network before rebranding in 2012, Natera (NASDAQ:NTRA) develops and commercializes genetic tests for prenatal screening, cancer detection, and organ transplant monitoring using its proprietary cell-free DNA technology.
Why Will NTRA Beat the Market?
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Products are reaching more customers as its tests processed averaged 19.3% growth over the past two years
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Earnings growth has massively outpaced its peers over the last five years as its EPS has compounded at 18.2% annually
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Free cash flow turned positive over the last five years, showing the company has crossed a key inflection point
At $308.00 per share, Natera trades at 12.6x forward price-to-sales. Is now the right time to buy? See for yourself in our full research report, it’s free.
Gulfport Energy (GPOR)
One-Year Revenue Growth: +35.2%
With drilling operations focused on the Utica Shale in eastern Ohio and the SCOOP play in central Oklahoma, Gulfport Energy (NYSE:GPOR) drills for and produces natural gas from underground shale formations.
Why Are We Positive on GPOR?
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Impressive 10.8% annual revenue growth over the last ten years indicates it’s winning market share this cycle
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Attractive asset base leads to wonderful unit economics and a premier gross margin of 70.9%
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Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
