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 are two stocks with lasting competitive advantages and one not so much.
One Momentum Stock to Sell:
Illumina (ILMN)
One-Month Return: +19.2%
Pioneering the ability to read the human genome at unprecedented speed and affordability, Illumina (NASDAQ: ILMN) develops and sells advanced DNA sequencing and microarray technologies that allow researchers and clinicians to analyze genetic variations and functions.
Why Do We Think Twice About ILMN?
- Sales stagnated over the last two years and signal the need for new growth strategies
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- ROIC of 0.7% reflects management’s challenges in identifying attractive investment opportunities
At $190.69 per share, Illumina trades at 35.7x forward P/E. If you’re considering ILMN for your portfolio, see our FREE research report to learn more.
Two Momentum Stocks to Watch:
Brinker International (EAT)
One-Month Return: +16%
Founded by Norman Brinker in Dallas, Brinker International (NYSE: EAT) is a casual restaurant chain that operates the Chili’s, Maggiano’s Little Italy, and It’s Just Wings banners.
Why Are We Positive on EAT?
- Same-store sales growth over the past two years shows it’s successfully drawing diners into its restaurants
- Economies of scale give it some operating leverage when demand rises
- ROIC punches in at 15.6%, illustrating management’s expertise in identifying profitable investments, and its returns are climbing as it finds even more attractive growth opportunities
Brinker International’s stock price of $174.97 implies a valuation ratio of 14.8x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Herbalife (HLF)
One-Month Return: +12.7%
With the first products sold out of the trunk of the founder’s car, Herbalife (NYSE: HLF) today offers a portfolio of shakes, supplements, personal care products, and weight management programs to help customers reach their nutritional and fitness goals.
Why Could HLF Be a Winner?
- Products command premium prices and result in a best-in-class gross margin of 86%
- Free cash flow margin increased by 4 percentage points over the last year, giving the company more capital to invest or return to shareholders
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
Herbalife is trading at $12.73 per share, or 4.7x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.
