2 Growth Stocks with All-Star Potential and 1 That Underwhelm

Barchart·04/01/2026 05:18:16

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. On that note, here are two growth stocks expanding their competitive advantages and one whose momentum may slow.

One Growth Stock to Sell:

Quanex (NX)

One-Year Revenue Growth: +28.4%

Starting in the seamless tube industry, Quanex (NYSE:NX) manufactures building products like window, door, kitchen, and bath cabinet components.

Why Does NX Give Us Pause?

1. Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 17.6 percentage points
2. Earnings per share fell by 12.6% annually over the last two years while its revenue grew, partly because it diluted shareholders
3. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value

Quanex is trading at $17.98 per share, or 8.9x forward P/E. Dive into our free research report to see why there are better opportunities than NX.

Two Growth Stocks to Watch:

DexCom (DXCM)

One-Year Revenue Growth: +15.6%

Founded in 1999 and receiving its first FDA approval in 2006, DexCom (NASDAQ:DXCM) develops and sells continuous glucose monitoring systems that allow people with diabetes to track their blood sugar levels without repeated finger pricks.

Why Do We Love DXCM?

1. Core business can prosper without any help from acquisitions as its organic revenue growth averaged 14.1% over the past two years
2. Share buybacks catapulted its annual earnings per share growth to 22.1%, which outperformed its revenue gains over the last five years
3. Free cash flow margin expanded by 20.9 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends

DexCom’s stock price of $62.02 implies a valuation ratio of 24.9x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.

TaskUs (TASK)

One-Year Revenue Growth: +19%

Starting as a virtual assistant service in 2008 before evolving into a global digital services provider, TaskUs (NASDAQ:TASK) provides outsourced digital services including customer experience management, content moderation, and AI data services to innovative technology companies.

Why Does TASK Stand Out?

1. Annual revenue growth of 19.9% over the last five years was superb and indicates its market share increased during this cycle
2. Free cash flow margin jumped by 18.3 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
3. Returns on capital are increasing as management’s prior bets are starting to bear fruit

At $6.71 per share, TaskUs trades at 4.6x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.

Stocks We Like Even More

WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don't just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.

But our AI platform says the party isn't over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating 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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.

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