1 Momentum Stock with Exciting Potential and 2 to Avoid

May 21, 2025 at 00:37 AM EDT

BC Cover Image

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 that may correct.

Two Momentum Stocks to Sell:

Brunswick (BC)

One-Month Return: +21.4%

Formerly known as Brunswick-Balke-Collender Company, Brunswick (NYSE: BC) is a designer and manufacturer of recreational marine products, including boats, engines, and marine parts.

Why Do We Think BC Will Underperform?

Products and services have few die-hard fans as sales have declined by 13.8% annually over the last two years
Free cash flow margin is forecasted to shrink by 2.8 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
Diminishing returns on capital suggest its earlier profit pools are drying up

At $52.80 per share, Brunswick trades at 12.1x forward P/E. If you’re considering BC for your portfolio, see our FREE research report to learn more.

Gorman-Rupp (GRC)

One-Month Return: +17.8%

Powering fluid dynamics since 1934, Gorman-Rupp (NYSE: GRC) has evolved from its Ohio origins into a global manufacturer and seller of pumps and pump systems.

Why Is GRC Not Exciting?

Annual revenue growth of 7.1% over the last two years was below our standards for the industrials sector
Estimated sales growth of 3.8% for the next 12 months implies demand will slow from its two-year trend
Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 4.2 percentage points

Gorman-Rupp’s stock price of $38.17 implies a valuation ratio of 17.8x forward P/E. Read our free research report to see why you should think twice about including GRC in your portfolio.

One Momentum Stock to Watch:

CECO Environmental (CECO)

One-Month Return: +55%

With roots dating back to 1869 and a focus on creating cleaner industrial operations, CECO Environmental (NASDAQ: CECO) provides technology and expertise that helps industrial companies reduce emissions, treat water, and improve energy efficiency across various sectors.

Why Could CECO Be a Winner?

Annual revenue growth of 17.2% over the past two years was outstanding, reflecting market share gains this cycle
Exciting sales outlook for the upcoming 12 months calls for 22.6% growth, an acceleration from its two-year trend
Adjusted operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient

CECO Environmental is trading at $27.85 per share, or 21.6x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.

Stocks We Like Even More

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 Growth Stocks for this month. 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.