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. On that note, here is one stock with the fundamentals to back up its performance and two best left ignored.
Two Momentum Stocks to Sell:
Papa John's (PZZA)
One-Month Return: +15.8%
Founded by the eclectic John “Papa John” Schnatter, Papa John’s (NASDAQ: PZZA) is a globally recognized pizza delivery and carryout chain known for “better ingredients” and “better pizza”.
Why Are We Hesitant About PZZA?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new restaurants
- Estimated sales growth of 1.5% for the next 12 months implies demand will slow from its six-year trend
- Lacking pricing power results in an inferior gross margin of 14.8% that must be offset by turning more tables
At $55.50 per share, Papa John's trades at 27.4x forward P/E. To fully understand why you should be careful with PZZA, check out our full research report (it’s free for active Edge members).
Mayville Engineering (MEC)
One-Month Return: +21%
Originally founded solely on tool and die manufacturing, Mayville Engineering Company (NYSE: MEC) specializes in metal fabrication, tube bending, and welding to be used in various industries.
Why Are We Out on MEC?
- Annual sales declines of 2% for the past two years show its products and services struggled to connect with the market during this cycle
- High input costs result in an inferior gross margin of 12.8% that must be offset through higher volumes
- Earnings per share have dipped by 43.3% annually over the past two years, which is concerning because stock prices follow EPS over the long term
Mayville Engineering is trading at $16.52 per share, or 94.8x forward P/E. Check out our free in-depth research report to learn more about why MEC doesn’t pass our bar.
One Momentum Stock to Buy:
Powell (POWL)
One-Month Return: +19.5%
Originally a metal-working shop supporting local petrochemical facilities, Powell (NYSE: POWL) has grown from a small Houston manufacturer to a global provider of electrical systems.
Why Will POWL Beat the Market?
- Annual revenue growth of 28.7% over the past two years was outstanding, reflecting market share gains this cycle
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 124% outpaced its revenue gains
- Free cash flow margin expanded by 12.8 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
Powell’s stock price of $362 implies a valuation ratio of 25.2x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at 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 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-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
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