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. All that said, here is one stock with the fundamentals to back up its performance and two that may correct.
Two Momentum Stocks to Sell:
BlackLine (BL)
One-Month Return: +15.5%
Started in 2001 by software engineer Therese Tucker, one of the very few women founders who took their companies public, BlackLine (NASDAQ: BL) provides software for organizations to automate accounting and finance tasks.
Why Does BL Give Us Pause?
- Products, pricing, or go-to-market strategy may need some adjustments as its 7.4% average billings growth over the last year was weak
- Estimated sales growth of 7.5% for the next 12 months implies demand will slow from its three-year trend
- Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 2.1 percentage points
BlackLine’s stock price of $53.20 implies a valuation ratio of 4.8x forward price-to-sales. Dive into our free research report to see why there are better opportunities than BL.
Kura Sushi (KRUS)
One-Month Return: +22.3%
Known for its conveyor belt that transports dishes to diners, Kura Sushi (NASDAQ: KRUS) is a chain of sushi restaurants serving traditional Japanese fare with a touch of modernity and technology.
Why Do We Avoid KRUS?
- Modest revenue base of $258.4 million gives it less fixed cost leverage and fewer distribution channels than larger companies
- Day-to-day expenses have swelled relative to revenue over the last year as its operating margin fell by 4.6 percentage points
- Cash-burning history makes us doubt the long-term viability of its business model
Kura Sushi is trading at $63.50 per share, or 943.6x forward P/E. To fully understand why you should be careful with KRUS, check out our full research report (it’s free).
One Momentum Stock to Watch:
Watts Water Technologies (WTS)
One-Month Return: +20.9%
Founded in 1874, Watts Water (NYSE: WTS) specializes in manufacturing water products and systems for residential, commercial, and industrial applications globally.
Why Should WTS Be on Your Watchlist?
- Offerings are mission-critical for businesses and lead to a stellar gross margin of 45%
- Operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
At $236.50 per share, Watts Water Technologies trades at 25.5x forward P/E. Is now the time to initiate a position? Find out in our full 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 Strong Momentum Stocks for this week. 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.
