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 with lasting competitive advantages and two best left ignored.
Two Momentum Stocks to Sell:
Carnival (CCL)
One-Month Return: +17.9%
Boasting outrageous amenities like a planetarium on board its ships, Carnival (NYSE: CCL) is one of the world's largest leisure travel companies and a prominent player in the cruise industry.
Why Do We Steer Clear of CCL?
- 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 4% for the last five years
- Earnings per share fell by 16.8% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Negative returns on capital show that some of its growth strategies have backfired
At $22.24 per share, Carnival trades at 12.4x forward P/E. If you’re considering CCL for your portfolio, see our FREE research report to learn more.
TaskUs (TASK)
One-Month Return: +17.4%
Starting as a virtual assistant service in 2008 before evolving into a global digital services provider, TaskUs (NASDAQ: TASK) provides outsourced digital services including customer experience management, content moderation, and AI data services to innovative technology companies.
Why Do We Think Twice About TASK?
- Sales trends were unexciting over the last two years as its 1.8% annual growth was below the typical business services company
- Earnings per share have contracted by 4% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
- Low returns on capital reflect management’s struggle to allocate funds effectively
TaskUs’s stock price of $16.43 implies a valuation ratio of 12x forward P/E. Read our free research report to see why you should think twice about including TASK in your portfolio.
One Momentum Stock to Buy:
Wingstop (WING)
One-Month Return: +42.9%
The passion project of two chicken wing aficionados in Texas, Wingstop (NASDAQ: WING) is a popular fast-food chain known for its flavorful and crispy chicken wings offered in a variety of sauces and seasonings.
Why Are We Bullish on WING?
- Same-store sales growth over the past two years shows it’s successfully drawing diners into its restaurants
- Healthy operating margin of 25.3% shows it’s a well-run company with efficient processes
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Wingstop is trading at $321.03 per share, or 81.1x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 9 Market-Beating Stocks. 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.
