Great things are happening to the stocks in this article. They’re all outperforming the market over the last month because of positive catalysts such as a new product line, constructive news flow, or even a loyal Reddit fanbase.
However, not all companies with momentum are long-term winners, and many investors have lost money by following short-term trends. All that said, here is one stock with lasting competitive advantages and two that may correct.
Two Momentum Stocks to Sell:
Guidewire (GWRE)
One-Month Return: +11.1%
Founded by two individuals involved in the development of leading procurement software Ariba, Guidewire (NYSE: GWRE) offers insurance companies a software-as-a-service platform to help sell their products and manage their workflows.
Why Are We Hesitant About GWRE?
- 12.4% annual revenue growth over the last three years was slower than its software peers
- Gross margin of 61.4% is below its competitors, leaving less money to invest in areas like marketing and R&D
- Extended payback periods on sales investments suggest the company’s platform isn’t resonating enough to drive efficient sales conversions
Guidewire’s stock price of $213.57 implies a valuation ratio of 14.3x forward price-to-sales. Check out our free in-depth research report to learn more about why GWRE doesn’t pass our bar.
Sealed Air (SEE)
One-Month Return: +15.1%
Founded in 1960, Sealed Air Corporation (NYSE: SEE) specializes in the development and production of protective and food packaging solutions, serving a variety of industries.
Why Do We Think SEE Will Underperform?
- Declining unit sales over the past two years indicate demand is soft and that the company may need to revise its strategy
- Sales were less profitable over the last two years as its earnings per share fell by 7.5% annually, worse than its revenue declines
- Diminishing returns on capital suggest its earlier profit pools are drying up
Sealed Air is trading at $30.57 per share, or 10.1x forward P/E. To fully understand why you should be careful with SEE, check out our full research report (it’s free).
One Momentum Stock to Buy:
Stride (LRN)
One-Month Return: +15.7%
Formerly known as K12, Stride (NYSE: LRN) is an education technology company providing education solutions through digital platforms.
Why Is LRN a Good Business?
- Rapid growth in enrollments demonstrates strong market adoption
- Free cash flow margin expanded by 6 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
- Returns on capital are growing as management capitalizes on its market opportunities
At $156 per share, Stride trades at 20.9x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks That Overcame Trump’s 2018 Tariffs
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.
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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free.
