The stocks featured in this article are seeing some big returns. Over the past month, they’ve outpaced the market due to new product launches, positive news, or even a dedicated social media following.
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 we think lives up to the hype and two not so much.
Two Momentum Stocks to Sell:
Insteel (IIIN)
One-Month Return: +31.6%
Growing from a small wire manufacturer to one of the largest in the U.S., Insteel (NYSE: IIIN) provides steel wire reinforcing products for concrete.
Why Do We Think IIIN Will Underperform?
- Annual sales declines of 13.4% for the past two years show its products and services struggled to connect with the market during this cycle
- Performance over the past two years shows each sale was less profitable as its earnings per share dropped by 44.9% annually, worse than its revenue
- Eroding returns on capital suggest its historical profit centers are aging
Insteel’s stock price of $35.74 implies a valuation ratio of 18.2x forward P/E. To fully understand why you should be careful with IIIN, check out our full research report (it’s free).
Moog (MOG.A)
One-Month Return: +8.6%
Responsible for the flight control actuation system integrated in the B-2 stealth bomber, Moog (NYSE: MOG.A) provides precision motion control solutions used in aerospace and defense applications
Why Are We Wary of MOG.A?
- Annual revenue growth of 4.2% over the last five years was below our standards for the industrials sector
- Estimated sales growth of 1.7% for the next 12 months implies demand will slow from its two-year trend
- Free cash flow margin dropped by 12.8 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Moog is trading at $179.24 per share, or 20.3x forward P/E. Dive into our free research report to see why there are better opportunities than MOG.A.
One Momentum Stock to Buy:
Sterling (STRL)
One-Month Return: +31.4%
Involved in the construction of a major highway, the Grand Parkway in Houston, TX, Sterling Infrastructure (NASDAQ: STRL) provides civil infrastructure construction.
Why Is STRL a Top Pick?
- Annual revenue growth of 11.9% over the last five years was superb and indicates its market share increased during this cycle
- Free cash flow margin increased by 13.9 percentage points over the last five years, giving the company more capital to invest or return to shareholders
- Returns on capital are growing as management capitalizes on its market opportunities
At $177.74 per share, Sterling trades at 22.2x 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 Growth Stocks for this month. 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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free.
