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.

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 sustainablelong-term growth. That said, here are three growth stocks facing an uphill battle and some other opportunities you should consider instead.

Figs (FIGS)

One-Year Revenue Growth: +24.7%

Rising to fame via TikTok and founded in 2013 by Heather Hasson and Trina Spear, Figs (NYSE:FIGS) is a healthcare apparel company known for its stylish approach to medical attire and uniforms.

Why Are We Out on FIGS?

1. Number of active customers has disappointed over the past two years, indicating weak demand for its offerings

2. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 10.7% for the last two years

3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

Figs's stock price of $14.33 implies a valuation ratio of 31.4x forward P/E. To fully understand why you should be careful with FIGS, check out our full research report (it's free) .

Arrow Electronics (ARW)

One-Year Revenue Growth: +26.1%

Founded as a single retail store, Arrow Electronics (NYSE:ARW) provides electronic components and enterprise computing solutions to businesses globally.

Why Does ARW Fall Short?

1. The company has faced growth challenges as its 1.9% annual revenue increases over the last five years fell short of other industrials companies

2. Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 12.2%

3. Eroding returns on capital suggest its historical profit centers are aging

Arrow Electronics is trading at $203.27 per share, or 10.1x forward P/E. Dive into our free research report to see why there are better opportunities than ARW .

Customers Bancorp (CUBI)

One-Year Revenue Growth: +20.8%

Originally founded with a "high-tech, high-touch" branch-light banking strategy, Customers Bancorp (NYSE:CUBI) is a bank holding company that provides commercial and consumer banking services through its Customers Bank subsidiary, with a focus on business lending and digital banking.

Why Does CUBI Worry Us?

1. 9.5% annual net interest income growth over the last five years was slower than its banking peers

2. Net interest margin of 3.2% is well below other banks, signaling its loans aren't very profitable

3. Performance over the past five years shows its incremental sales were less profitable, as its 4.2% annual earnings per share growth trailed its revenue gains