The stocks featured in this article are seeing some big returns. Over the past month, they’ve outpaced the market due to some combination of positive news, upbeat results, or supportive macro developments. As such, investors are taking notice and bidding up shares.

But not every company with momentum is a long-term winner, and plenty of investors have lost money betting on short-term fads. Keeping that in mind, here is one stock with lasting competitive advantages and two that may correct.

Two Momentum Stocks to Sell:

CAVA (CAVA)

One-Month Return: +28.2%

Starting from a single Washington, D.C. location, CAVA (NYSE: CAVA) operates a fast-casual restaurant chain offering customizable Mediterranean-inspired dishes.

Why Are We Cautious About CAVA?

1. Subpar operating margin of 4.6% constrains its ability to invest in process improvements or effectively respond to new competitive threats
2. Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
3. Negative returns on capital show management lost money while trying to expand the business

CAVA is trading at $86.91 per share, or 163.8x forward P/E. Read our free research report to see why you should think twice about including CAVA in your portfolio.

SolarEdge (SEDG)

One-Month Return: +9%

Established in 2006, SolarEdge (NASDAQ: SEDG) creates advanced systems to improve the efficiency of solar panels.

Why Do We Think SEDG Will Underperform?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 4.1% annually over the last five years
2. Negative free cash flow raises questions about the return timeline for its investments
3. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value

SolarEdge’s stock price of $46.96 implies a valuation ratio of 783.4x forward P/E. To fully understand why you should be careful with SEDG, check out our full research report (it’s free).

One Momentum Stock to Buy:

Remitly (RELY)

One-Month Return: 0%

With Amazon founder Jeff Bezos as an early investor, Remitly (NASDAQ: RELY) is an online platform that enables consumers to safely and quickly send money globally.

Why Are We Bullish on RELY?

1. Active Customers are rising, meaning the company can increase revenue without incurring additional customer acquisition costs if it can cross-sell additional products and features
2. Performance over the past three years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 108% outpaced its revenue gains
3. Free cash flow margin jumped by 34.7 percentage points over the last few years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends

At $16.19 per share, Remitly trades at 8.4x forward EV/EBITDA. Is now the time to initiate a position? See for yourself in our full 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 Kadant (+351% five-year return). Find your next big winner with StockStory today.