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.
However, not all companies with momentum are long-term winners, and many investors have lost money by following short-term trends. On that note, here are two stocks with lasting competitive advantages and one that may correct.
One Momentum Stock to Sell:
Semtech (SMTC)
One-Month Return: +48%
A public company since the late 1960s, Semtech (NASDAQ: SMTC) is a provider of analog and mixed-signal semiconductors used for Internet of Things systems and cloud connectivity.
Why Should You Dump SMTC?
- Expenses have increased as a percentage of revenue over the last five years as its operating margin fell by 16.5 percentage points
- Free cash flow margin dropped by 7.6 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Push for growth has led to negative returns on capital, signaling value destruction, and its falling returns suggest its earlier profit pools are drying up
At $108.36 per share, Semtech trades at 46.4x forward P/E. If you’re considering SMTC for your portfolio, see our FREE research report to learn more.
Two Momentum Stocks to Buy:
Bloom Energy (BE)
One-Month Return: +38.1%
Working in stealth mode for eight years, Bloom Energy (NYSE: BE) designs, manufactures, and markets solid oxide fuel cell systems for on-site power generation.
Why Will BE Beat the Market?
- Annual revenue growth of 23.2% over the last two years was superb and indicates its market share increased during this cycle
- Free cash flow margin is now positive, indicating the company has passed a significant test
- Historical investments are beginning to pay off as its returns on capital are growing
Bloom Energy is trading at $207.07 per share, or 147.2x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Axos Financial (AX)
One-Month Return: +18.2%
Originally founded as Bank of Internet USA in 1999 before rebranding in 2018, Axos Financial (NYSE: AX) is a diversified financial services company that provides digital banking, securities clearing, and investment advisory solutions to retail and business customers nationwide.
Why Should You Buy AX?
- Annual net interest income growth of 17.4% over the last five years was superb and indicates its market share increased during this cycle
- Differentiated product suite results in a Strong performance of its loan book results in a High-yielding loan book and low cost of funds lead to a best-in-class net interest margin of 4.9%
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
Axos Financial’s stock price of $98.02 implies a valuation ratio of 1.7x forward P/B. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it's flagging for this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
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.
