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.
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:
Royal Caribbean (RCL)
One-Month Return: +22.1%
Established in 1968, Royal Caribbean Cruises (NYSE: RCL) is a global cruise vacation company renowned for its innovative and exciting cruise experiences.
Why Should You Sell RCL?
- Number of passenger cruise days has disappointed over the past two years, indicating weak demand for its offerings
- Free cash flow margin is forecasted to grow by 1.2 percentage points in the coming year, potentially giving the company more chips to play with
- Underwhelming 6% return on capital reflects management’s difficulties in finding profitable growth opportunities
At $312.80 per share, Royal Caribbean trades at 17.8x forward P/E. To fully understand why you should be careful with RCL, check out our full research report (it’s free).
Xponential Fitness (XPOF)
One-Month Return: +17.3%
Owner of CycleBar, Rumble, and Club Pilates, Xponential Fitness (NYSE: XPOF) is a boutique fitness brand offering diverse and specialized exercise experiences.
Why Do We Pass on XPOF?
- Products and services have few die-hard fans as sales have declined by 4.4% annually over the last two years
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 1.3% for the last two years
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Xponential Fitness’s stock price of $6.70 implies a valuation ratio of 11.6x forward P/E. Read our free research report to see why you should think twice about including XPOF in your portfolio.
One Momentum Stock to Watch:
Applied Materials (AMAT)
One-Month Return: +43.3%
Founded in 1967 as the first company to develop tools for other businesses in the semiconductor industry, Applied Materials (NASDAQ: AMAT) is the largest provider of semiconductor wafer fabrication equipment.
Why Are We Fans of AMAT?
- Projected revenue growth of 33% for the next 12 months indicates demand will rise above its two-year trend
- Highly efficient business model is illustrated by its impressive 29.1% operating margin
- ROIC punches in at 46.2%, illustrating management’s expertise in identifying profitable investments
Applied Materials is trading at $619.41 per share, or 41.9x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
