The stocks featured in this article are seeing some big returns. Over the past month, they’ve outpaced the market due to some combination of positive news, upbeat results, or supportive macro developments. As such, investors are taking notice and bidding up shares.
But not every company with momentum is a long-term winner, and plenty of investors have lost money betting on short-term fads. Keeping that in mind, here is one stock with lasting competitive advantages and two best left ignored.
Two Momentum Stocks to Sell:
Calavo (CVGW)
One-Month Return: +5.1%
A trailblazer in the avocado industry, Calavo Growers (NASDAQ: CVGW) is a pioneering California-based provider of high-quality avocados and other fresh food products.
Why Do We Steer Clear of CVGW?
- Sales tumbled by 17.2% annually over the last three years, showing consumer trends are working against its favor
- Revenue base of $693.7 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Gross margin of 10.1% is below its competitors, leaving less money to invest in areas like marketing and production facilities
At $21.77 per share, Calavo trades at 12.4x forward P/E. If you’re considering CVGW for your portfolio, see our FREE research report to learn more.
Rocket Lab (RKLB)
One-Month Return: +74.2%
Becoming the first private company in the Southern Hemisphere to reach space, Rocket Lab (NASDAQ: RKLB) offers rockets designed for launching small satellites.
Why Does RKLB Fall Short?
- Persistent operating margin losses suggest the business manages its expenses poorly
- Earnings per share have contracted by 33.4% annually over the last three years, a headwind for returns as stock prices often echo long-term EPS performance
- Negative free cash flow raises questions about the return timeline for its investments
Rocket Lab’s stock price of $70.32 implies a valuation ratio of 52.3x forward price-to-sales. Dive into our free research report to see why there are better opportunities than RKLB.
One Momentum Stock to Buy:
Lululemon (LULU)
One-Month Return: +14.4%
Originally serving yogis and hockey players, Lululemon (NASDAQ: LULU) is a designer, distributor, and retailer of athletic apparel for men and women.
Why Will LULU Outperform?
- Brick-and-mortar locations are witnessing elevated demand as their same-store sales growth averaged 3.8% over the past two years
- Collection of products is difficult to replicate at scale and results in a best-in-class gross margin of 58.6%
- LULU is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
Lululemon is trading at $208.68 per share, or 17.3x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out 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 244% over the last five years (as of June 30, 2025).
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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.
