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. Keeping that in mind, here is one stock we think lives up to the hype and two best left ignored.
Two Momentum Stocks to Sell:
Mission Produce (AVO)
One-Month Return: +24.2%
Founded in 1983 in California, Mission Produce (NASDAQ: AVO) grows, packages, and distributes avocados.
Why Are We Cautious About AVO?
- Subscale operations are evident in its revenue base of $1.25 billion, meaning it has fewer distribution channels than its larger rivals
- Easily substituted products (and therefore stiff competition) result in an inferior gross margin of 11.6% that must be offset through higher volumes
- Low returns on capital reflect management’s struggle to allocate funds effectively
Mission Produce is trading at $13.50 per share, or 18.7x forward P/E. Read our free research report to see why you should think twice about including AVO in your portfolio.
GoodRx (GDRX)
One-Month Return: +11.7%
Started in 2011 to tackle the problem of high prescription drug costs in America, GoodRx (NASDAQ: GDRX) operates a digital platform that helps consumers find lower prices on prescription medications through price comparison tools and discount codes.
Why Do We Avoid GDRX?
- Flat sales over the last two years suggest it must find different ways to grow during this cycle
- Modest revenue base of $787.9 million gives it less fixed cost leverage and fewer distribution channels than larger companies
- Push for growth has led to negative returns on capital, signaling value destruction
At $2.96 per share, GoodRx trades at 9.3x forward P/E. If you’re considering GDRX for your portfolio, see our FREE research report to learn more.
One Momentum Stock to Buy:
HCI Group (HCI)
One-Month Return: +13.7%
Starting as a Florida "take-out" insurer that assumed policies from the state-backed Citizens Property Insurance Corporation, HCI Group (NYSE: HCI) provides property and casualty insurance, primarily homeowners coverage, while leveraging proprietary technology to improve underwriting and claims processing.
Why Is HCI a Top Pick?
- Net premiums earned surged by 21.1% annually over the past two years, reflecting strong market share gains this cycle
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 54.9% over the last two years outstripped its revenue performance
- Impressive 48.1% annual book value per share growth over the last two years indicates it’s building equity value this cycle
HCI Group’s stock price of $179.28 implies a valuation ratio of 1.9x forward P/B. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum 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.
