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.

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 we think lives up to the hype and two that may correct.

Two Momentum Stocks to Sell:

Rush Street Interactive (RSI)

One-Month Return: +15.4%

Specializing in online casino gaming and sports betting, Rush Street Interactive (NYSE: RSI) is an operator of digital gaming platforms.

Why Does RSI Worry Us?

1. Operating margin of 0.5% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
2. Poor free cash flow margin of 8.8% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends

At $14.65 per share, Rush Street Interactive trades at 45x forward P/E. Read our free research report to see why you should think twice about including RSI in your portfolio.

Royal Caribbean (RCL)

One-Month Return: +20.1%

Established in 1968, Royal Caribbean Cruises (NYSE: RCL) is a global cruise vacation company renowned for its innovative and exciting cruise experiences.

Why Are We Hesitant About RCL?

1. Annual sales growth of 9.7% over the last five years lagged behind its consumer discretionary peers as its large revenue base made it difficult to generate incremental demand
2. Free cash flow margin is forecasted to shrink by 7.1 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
3. ROIC of -0.2% reflects management’s challenges in identifying attractive investment opportunities

Royal Caribbean’s stock price of $308.52 implies a valuation ratio of 20.2x forward P/E. To fully understand why you should be careful with RCL, check out our full research report (it’s free).

One Momentum Stock to Buy:

Vertiv (VRT)

One-Month Return: +17.7%

Formerly part of Emerson Electric, Vertiv (NYSE: VRT) manufactures and services infrastructure technology products for data centers and communication networks.

Why Do We Love VRT?

1. Core business is healthy and doesn’t need acquisitions to boost sales as its organic revenue growth averaged 18.5% over the past two years
2. Free cash flow margin jumped by 6.5 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
3. Rising returns on capital show management is finding more attractive investment opportunities

Vertiv is trading at $127 per share, or 34.1x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio 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