The stocks featured in this article are seeing some big returns. Over the past month, they’ve outpaced the market due to new product launches, positive news, or even a dedicated social media following.
While momentum can be a leading indicator, it has burned many investors as it doesn’t always correlate with long-term success. Keeping that in mind, here is one stock with lasting competitive advantages and two best left ignored.
Two Momentum Stocks to Sell:
Western Digital (WDC)
One-Month Return: +22.8%
Founded in 1970 by a Motorola employee, Western Digital (NASDAQ: WDC) is a leading producer of hard disk drives, SSDs and flash memory.
Why Are We Out on WDC?
- Sales tumbled by 7.9% annually over the last five years, showing market trends are working against its favor during this cycle
- Gross margin of 14.5% reflects its high production costs
- Poor expense management has led to an operating margin of 4.3% that is below the industry average
Western Digital’s stock price of $50.24 implies a valuation ratio of 10.5x forward P/E. To fully understand why you should be careful with WDC, check out our full research report (it’s free).
AMC Entertainment (AMC)
One-Month Return: +20.4%
With a profile that was raised due to meme stock mania beginning in 2021, AMC Entertainment (NYSE: AMC) operates movie theaters primarily in the US and Europe.
Why Are We Wary of AMC?
- Products and services have few die-hard fans as sales have declined by 2.7% annually over the last five years
- Negative free cash flow raises questions about the return timeline for its investments
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
At $3.28 per share, AMC Entertainment trades at 2.3x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why AMC doesn’t pass our bar.
One Momentum Stock to Watch:
Vita Coco (COCO)
One-Month Return: +15.6%
Founded in 2004 followed by a 2021 IPO, The Vita Coco Company (NASDAQ: COCO) offers coconut water products that are a natural way to quench thirst.
Why Is COCO Interesting?
- Stellar 8.4% growth in unit sales over the past two years demonstrates the high demand for its products
- Earnings per share grew by 133% annually over the last three years and trumped its peers
- Industry-leading 33.4% return on capital demonstrates management’s skill in finding high-return investments, and its returns are growing as it capitalizes on even better market opportunities
Vita Coco is trading at $34.81 per share, or 29.7x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
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 5 Growth Stocks for this month. 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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free.
