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.

While momentum can be a leading indicator, it has burned many investors as it doesn’t always correlate with long-term success. On that note, here is one stock with the fundamentals to back up its performance and two not so much.

Two Momentum Stocks to Sell:

Krispy Kreme (DNUT)

One-Month Return: +12.6%

Famous for its Original Glazed doughnuts and parent company of Insomnia Cookies, Krispy Kreme (NASDAQ: DNUT) is one of the most beloved and well-known fast-food chains in the world.

Why Do We Pass on DNUT?

1. Falling earnings per share over the last three years has some investors worried as stock prices ultimately follow EPS over the long term
2. Cash burn has widened over the last year, making us question whether it can reliably generate shareholder value
3. Short cash runway increases the probability of a capital raise that dilutes existing shareholders

At $4.02 per share, Krispy Kreme trades at 5.5x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than DNUT.

Dine Brands (DIN)

One-Month Return: +14.8%

Operating a franchise model, Dine Brands (NYSE: DIN) is a casual restaurant chain that owns the Applebee’s and IHOP banners.

Why Is DIN Risky?

1. Poor same-store sales performance over the past two years indicates it’s having trouble bringing new diners into its restaurants
2. Efficiency has decreased over the last year as its operating margin fell by 4.6 percentage points
3. 6× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings

Dine Brands is trading at $28.35 per share, or 6x forward P/E. Read our free research report to see why you should think twice about including DIN in your portfolio.

One Momentum Stock to Watch:

Graham Corporation (GHM)

One-Month Return: +15.4%

Founded when its founder patented a unique design for a vacuum system used in the sugar refining process, Graham (NYSE: GHM) provides vacuum and heat transfer equipment for the energy, petrochemical, refining, and chemical sectors.

Why Is GHM Interesting?

1. Backlog has averaged 21.7% growth over the past two years, showing it has a pipeline of unfulfilled orders that will support revenue in the future
2. Operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
3. Incremental sales over the last two years have been highly profitable as its earnings per share increased by 145% annually, topping its revenue gains

Graham Corporation’s stock price of $60.40 implies a valuation ratio of 44x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free for active Edge members .

High-Quality Stocks for All Market Conditions

Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

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