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. Keeping that in mind, here is one stock with lasting competitive advantages and two best left ignored.
Two Momentum Stocks to Sell:
ThredUp (TDUP)
One-Month Return: +41.2%
Founded to revolutionize thrifting, ThredUp (NASDAQ: TDUP) is a leading online fashion resale marketplace offering a wide selection of gently-used clothing and accessories.
Why Do We Avoid TDUP?
- Demand for its offerings was relatively low as its number of orders has underwhelmed
- Historical operating margin losses point to an inefficient cost structure
- Cash-burning history makes us doubt the long-term viability of its business model
At $10 per share, ThredUp trades at 95.5x forward EV-to-EBITDA. To fully understand why you should be careful with TDUP, check out our full research report (it’s free).
Grocery Outlet (GO)
One-Month Return: +39.7%
Due to its differentiated procurement and buying approach, Grocery Outlet (NASDAQ: GO) is a discount grocery store chain that offers substantial discounts on name-brand products.
Why Do We Think Twice About GO?
- Operating margin of 1.4% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
- Below-average returns on capital indicate management struggled to find compelling investment opportunities, and its shrinking returns suggest its past profit sources are losing steam
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
Grocery Outlet’s stock price of $18.54 implies a valuation ratio of 22.7x forward P/E. If you’re considering GO for your portfolio, see our FREE research report to learn more.
One Momentum Stock to Watch:
The Trade Desk (TTD)
One-Month Return: -28.3%
Founded by former Microsoft engineers Jeff Green and Dave Pickles, The Trade Desk (NASDAQ: TTD) offers cloud-based software that uses data to help advertisers better plan, place, and target their online ads.
Why Could TTD Be a Winner?
- Billings growth has averaged 24.2% over the last year, indicating a healthy pipeline of new contracts that should drive future revenue increases
- User-friendly software enables clients to ramp up spending quickly, leading to the speedy recovery of customer acquisition costs
- Healthy operating margin of 17.7% shows it’s a well-run company with efficient processes, and its profits increased over the last year as it scaled
The Trade Desk is trading at $54.05 per share, or 8.8x forward price-to-sales. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Stocks We Like Even More
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at 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-micro-cap company Kadant (+351% 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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