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. On that note, here is one stock with the fundamentals to back up its performance and two best left ignored.
Two Momentum Stocks to Sell:
Denny's (DENN)
One-Month Return: +22.2%
Open around the clock, Denny’s (NASDAQ: DENN) is a chain of diner restaurants serving breakfast and traditional American fare.
Why Should You Sell DENN?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Modest revenue base of $457.2 million gives it less fixed cost leverage and fewer distribution channels than larger companies
- 5× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
At $6.14 per share, Denny's trades at 15.1x forward P/E. If you’re considering DENN for your portfolio, see our FREE research report to learn more.
AdaptHealth (AHCO)
One-Month Return: +6.4%
With a network of approximately 680 locations serving patients across all 50 states, AdaptHealth (NASDAQ: AHCO) provides home medical equipment, supplies, and related services to patients with chronic conditions like sleep apnea, diabetes, and respiratory disorders.
Why Are We Wary of AHCO?
- Muted 2.1% annual revenue growth over the last two years shows its demand lagged behind its healthcare peers
- Issuance of new shares over the last five years caused its earnings per share to fall by 1.3% annually while its revenue grew
- Underwhelming 1.3% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its decreasing returns suggest its historical profit centers are aging
AdaptHealth’s stock price of $9.59 implies a valuation ratio of 11.2x forward P/E. To fully understand why you should be careful with AHCO, check out our full research report (it’s free for active Edge members).
One Momentum Stock to Buy:
AMD (AMD)
One-Month Return: +8.1%
Founded in 1969 by a group of former Fairchild semiconductor executives led by Jerry Sanders, Advanced Micro Devices (NASDAQ: AMD) is one of the leading designers of computer processors and graphics chips used in PCs and data centers.
Why Are We Bullish on AMD?
- Impressive 29.9% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Demand for the next 12 months is expected to accelerate above its two-year trend as Wall Street forecasts robust revenue growth of 26.5%
- Earnings growth has trumped its peers over the last five years as its EPS has compounded at 27.9% annually
AMD is trading at $228.63 per share, or 42.6x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .
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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