Each stock in this article is trading near its 52-week high. These elevated prices usually indicate some degree of investor confidence, business improvements, or favorable market conditions.
But not every company with momentum is a long-term winner, and plenty of investors have lost money betting on short-term fads. On that note, here are two stocks with lasting competitive advantages and one that may correct.
One Stock to Sell:
Sotera Health Company (SHC)
One-Month Return: -3.8%
With a critical role in ensuring the safety of millions of patients worldwide, Sotera Health (NASDAQGS:SHC) provides sterilization services, lab testing, and advisory services to ensure medical devices, pharmaceuticals, and food products are safe for use.
Why Are We Hesitant About SHC?
- Muted 7.3% annual revenue growth over the last five years shows its demand lagged behind its healthcare peers
- Revenue base of $1.12 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Low free cash flow margin of 1.1% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
Sotera Health Company is trading at $15.78 per share, or 19.7x forward P/E. Read our free research report to see why you should think twice about including SHC in your portfolio.
Two Stocks to Buy:
Monolithic Power Systems (MPWR)
One-Month Return: +4.7%
Founded in 1997 by its longtime CEO Michael Hsing, Monolithic Power Systems (NASDAQ: MPWR) is an analog and mixed signal chipmaker that specializes in power management chips meant to minimize total energy consumption.
Why Is MPWR a Good Business?
- Market share has increased this cycle as its 29.9% annual revenue growth over the last five years was exceptional
- Strong free cash flow margin of 30.3% enables it to reinvest or return capital consistently, and its rising cash conversion increases its margin of safety
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
Monolithic Power Systems’s stock price of $890.99 implies a valuation ratio of 49.9x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Federal Signal (FSS)
One-Month Return: -3.6%
Developing sirens that warned of air raid attacks or fallout during the Cold War, Federal Signal (NYSE: FSS) provides safety and emergency equipment for government agencies, municipalities, and industrial companies.
Why Will FSS Outperform?
- Operating margin expanded by 4.4 percentage points over the last five years as it scaled and became more efficient
- Additional sales over the last two years increased its profitability as the 28.5% annual growth in its earnings per share outpaced its revenue
- Free cash flow margin expanded by 4.1 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
At $122.81 per share, Federal Signal trades at 30.3x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
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 Growth Stocks for this month. 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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