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. All that said, here is one stock with lasting competitive advantages and two best left ignored.
Two Momentum Stocks to Sell:
Microchip Technology (MCHP)
One-Month Return: +24.9%
Spun out from General Instrument in 1987, Microchip Technology (NASDAQ: MCHP) is a leading provider of microcontrollers and integrated circuits used mainly in the automotive world, especially in electric vehicles and their charging devices.
Why Do We Avoid MCHP?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 3.8% annually over the last five years
- Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 17.7% annually, worse than its revenue
- Free cash flow margin shrank by 15.9 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
At $78.68 per share, Microchip Technology trades at 31.6x forward P/E. To fully understand why you should be careful with MCHP, check out our full research report (it’s free).
Robert Half (RHI)
One-Month Return: +17.6%
With roots dating back to 1948 as the first specialized recruiting firm for accounting and finance professionals, Robert Half (NYSE: RHI) provides specialized talent solutions and business consulting services, connecting skilled professionals with companies across various fields.
Why Are We Out on RHI?
- Annual sales declines of 8.3% for the past two years show its products and services struggled to connect with the market during this cycle
- Earnings per share fell by 13.3% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Robert Half’s stock price of $27.40 implies a valuation ratio of 17.9x forward P/E. Dive into our free research report to see why there are better opportunities than RHI.
One Momentum Stock to Watch:
Hewlett Packard Enterprise (HPE)
One-Month Return: +21.9%
Born from the 2015 split of the iconic Silicon Valley pioneer Hewlett-Packard, Hewlett Packard Enterprise (NYSE: HPE) provides edge-to-cloud technology solutions that help businesses capture, analyze, and act upon their data across hybrid IT environments.
Why Does HPE Stand Out?
- Offerings are pivotal for their customers' operations as its ARR has averaged 49.2% growth over the past two years
- Dominant market position is represented by its $35.74 billion in revenue and gives it fixed cost leverage when sales grow
- Exciting sales outlook for the upcoming 12 months calls for 16.6% growth, an acceleration from its two-year trend
Hewlett Packard Enterprise is trading at $26.43 per share, or 10.8x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 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.
