Exciting developments are taking place for the stocks in this article. They’ve all surged ahead of the broader market over the last month as catalysts such as new products and positive media coverage have propelled their returns.
While momentum can be a leading indicator, it has burned many investors as it doesn’t always correlate with long-term success. All that said, here is one stock we think lives up to the hype and two that may correct.
Two Momentum Stocks to Sell:
Grocery Outlet (GO)
One-Month Return: +16.9%
Due to its differentiated procurement and buying approach, Grocery Outlet (NASDAQ: GO) is a discount grocery store chain that offers substantial discounts on name-brand products.
Why Do We Steer Clear of GO?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
- Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 6.5 percentage points
- 7× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Grocery Outlet is trading at $8.30 per share, or 15.9x forward P/E. To fully understand why you should be careful with GO, check out our full research report (it’s free).
Luxfer (LXFR)
One-Month Return: +25.8%
With its magnesium alloys used in the construction of the famous Spirit of St. Louis aircraft, Luxfer (NYSE: LXFR) offers specialized materials, components, and gas containment devices to various industries.
Why Does LXFR Worry Us?
- Sales tumbled by 2.8% annually over the last two years, showing market trends are working against its favor during this cycle
- Sales are projected to tank by 3.6% over the next 12 months as its demand continues evaporating
- Earnings growth underperformed the sector average over the last five years as its EPS grew by just 1.3% annually
At $15.37 per share, Luxfer trades at 11.9x forward P/E. Read our free research report to see why you should think twice about including LXFR in your portfolio.
One Momentum Stock to Watch:
Analog Devices (ADI)
One-Month Return: +21.5%
Founded by two MIT graduates, Ray Stata and Matthew Lorber in 1965, Analog Devices (NASDAQ: ADI) is one of the largest providers of high performance analog integrated circuits used mainly in industrial end markets, along with communications, autos, and consumer devices.
Why Does ADI Stand Out?
- Annual revenue growth of 14.9% over the last five years was superb and indicates its market share increased during this cycle
- Offerings are difficult to replicate at scale and result in a stellar gross margin of 60.3%
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its growing cash flow gives it even more resources to deploy
Analog Devices’s stock price of $397.82 implies a valuation ratio of 33.5x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
