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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.

Deciphering which businesses can sustain their high growth rates is a challenge for even the most seasoned professionals, which is why we started StockStory. Keeping that in mind, here is one growth stock expanding its competitive advantage and two whose momentum may slow.

Two Growth Stocks to Sell:

eHealth (EHTH)

One-Year Revenue Growth: +17%

Aiming to address a high-stakes and often confusing decision, eHealth (NASDAQ:EHTH) guides consumers through health insurance enrollment and related topics.

Why Are We Wary of EHTH?

1. Value proposition isn’t resonating strongly as its estimated membership averaged 1.8% drops over the last two years

2. Projected sales decline of 3.4% for the next 12 months points to a tough demand environment ahead

3. Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders

At $4.64 per share, eHealth trades at 3.1x forward EV/EBITDA. Check out our free in-depth research report to learn more about why EHTH doesn’t pass our bar.

Rush Street Interactive (RSI)

One-Year Revenue Growth: +29.9%

Specializing in online casino gaming and sports betting, Rush Street Interactive (NYSE:RSI) is an operator of digital gaming platforms.

Why Are We Cautious About RSI?

1. Estimated sales growth of 12.4% for the next 12 months implies demand will slow from its two-year trend

2. Responsiveness to unforeseen market trends is restricted due to its substandard operating profitability

3. Low free cash flow margin of 8.8% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders

Rush Street Interactive is trading at $12.50 per share, or 37.2x forward P/E. If you’re considering RSI for your portfolio, see our FREE research report to learn more.

One Growth Stock to Watch:

MACOM (MTSI)

One-Year Revenue Growth: +32.6%

Founded in the 1950s as Microwave Associates, a communications supplier to the US Army Signal Corp, today MACOM Technology Solutions (NASDAQ: MTSI) is a provider of analog chips used in optical, wireless, and satellite networks.

Why Are We Positive On MTSI?

1. Annual revenue growth of 9.9% over the last two years was superb and indicates its market share increased during this cycle

2. Projected revenue growth of 21.6% for the next 12 months is above its two-year trend, pointing to accelerating demand

3. Earnings per share grew by 81.7% annually over the last five years and trumped its peers