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.
But not every company with momentum is a long-term winner, and plenty of investors have lost money betting on short-term fads. On that note, here is one stock we think lives up to the hype and two best left ignored.
Two Momentum Stocks to Sell:
Steven Madden (SHOO)
One-Month Return: +12.9%
As seen in the infamous Wolf of Wall Street movie, Steven Madden (NASDAQ: SHOO) is a fashion brand famous for its trendy and innovative footwear, appealing to a young and style-conscious audience.
Why Does SHOO Worry Us?
- 9.4% annual revenue growth over the last two years was slower than its consumer discretionary peers
- Poor free cash flow margin of 7.9% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Diminishing returns on capital suggest its earlier profit pools are drying up
Steven Madden’s stock price of $34.43 implies a valuation ratio of 20.8x forward P/E. If you’re considering SHOO for your portfolio, see our FREE research report to learn more.
Dell (DELL)
One-Month Return: +15.4%
Founded by Michael Dell in his University of Texas dorm room in 1984 with just $1,000, Dell Technologies (NYSE: DELL) provides hardware, software, and services that help organizations build their IT infrastructure, manage cloud environments, and enable digital transformation.
Why Does DELL Fall Short?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 2.9% for the last five years
- Underwhelming ARR growth of 3.6% suggests the company faced challenges in acquiring and retaining long-term customers
- Free cash flow margin shrank by 6.6 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Dell is trading at $142 per share, or 13.5x forward P/E. Read our free research report to see why you should think twice about including DELL in your portfolio.
One Momentum Stock to Buy:
Vertiv (VRT)
One-Month Return: +32%
Formerly part of Emerson Electric, Vertiv (NYSE: VRT) manufactures and services infrastructure technology products for data centers and communication networks.
Why Are We Backing VRT?
- Average organic revenue growth of 19.6% over the past two years demonstrates its ability to expand independently without relying on acquisitions
- Free cash flow margin jumped by 5.6 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
- Rising returns on capital show management is finding more attractive investment opportunities
At $160.75 per share, Vertiv trades at 40x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our 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-small-cap company Exlservice (+354% 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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