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 with lasting competitive advantages and two best left ignored.
Two Momentum Stocks to Sell:
Orion (ORN)
One-Month Return: +18.7%
Established in 1994, Orion (NYSE: ORN) provides construction services for marine infrastructure and industrial projects.
Why Do We Think ORN Will Underperform?
- Sales pipeline suggests its future revenue growth won’t meet our standards as its backlog averaged 1.7% declines over the past two years
- Gross margin of 9.3% is below its competitors, leaving less money to invest in areas like marketing and R&D
- Cash-burning history makes us doubt the long-term viability of its business model
Orion’s stock price of $8.26 implies a valuation ratio of 36.2x forward P/E. To fully understand why you should be careful with ORN, check out our full research report (it’s free).
Luxfer (LXFR)
One-Month Return: +8.6%
With its magnesium alloys used in the construction of the famous Spirit of St. Louis aircraft, Luxfer (NYSE: LXFR) offers specialized materials, components, and gas containment devices to various industries.
Why Should You Dump LXFR?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 1.9% annually over the last two years
- 7.8 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
- Eroding returns on capital suggest its historical profit centers are aging
Luxfer is trading at $14.29 per share, or 13x forward P/E. Read our free research report to see why you should think twice about including LXFR in your portfolio.
One Momentum Stock to Watch:
Guidewire Software (GWRE)
One-Month Return: +18%
With its systems powering the operations of hundreds of insurance brands across 42 countries, Guidewire Software (NYSE: GWRE) provides a technology platform that helps property and casualty insurance companies manage their core operations, digital engagement, and analytics.
Why Are We Fans of GWRE?
- Billings have averaged 21.2% growth over the last year, showing it’s securing new contracts that could potentially increase in value over time
- Well-designed software integrates seamlessly with other workflows, enabling swift payback periods on marketing expenses and customer growth at scale
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
At $249.49 per share, Guidewire Software trades at 15.1x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check 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 Comfort Systems (+782% 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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