The stocks featured in this article are seeing some big returns. Over the past month, they’ve outpaced the market due to new product launches, positive news, or even a dedicated social media following.
However, not all companies with momentum are long-term winners, and many investors have lost money by following short-term trends. On that note, here is one stock we think lives up to the hype and two best left ignored.
Two Momentum Stocks to Sell:
Unity (U)
One-Month Return: +21%
Started as a game studio by three friends in a Copenhagen apartment, Unity (NYSE:U) is a software as a service platform that makes it easier to develop and monetize new games and other visual digital experiences.
Why Does U Give Us Pause?
- Products, pricing, or go-to-market strategy need some adjustments as its billings have averaged 10.2% declines over the last year
- Competitive market dynamics make it difficult to retain customers, leading to a weak 95.8% net revenue retention rate
- Competitive market means the company must spend more on sales and marketing to stand out even if the return on investment is low
Unity is trading at $21.97 per share, or 5x forward price-to-sales. Read our free research report to see why you should think twice about including U in your portfolio.
Custom Truck One Source (CTOS)
One-Month Return: +24.9%
Inspired by a family gas station, Custom Truck One Source (NYSE:CTOS) is a distributor of trucks and heavy equipment.
Why Do We Avoid CTOS?
- Sales trends were unexciting over the last two years as its 4.6% annual growth was below the typical industrials company
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 29.2 percentage points
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Custom Truck One Source’s stock price of $4.56 implies a valuation ratio of 62.1x forward P/E. To fully understand why you should be careful with CTOS, check out our full research report (it’s free).
One Momentum Stock to Watch:
Roblox (RBLX)
One-Month Return: +35.7%
Best known for its wide assortment of user-generated content, Roblox (NYSE:RBLX) is an online gaming platform and game creation system.
Why Should RBLX Be on Your Watchlist?
- Daily Active Users are rising, meaning the company can increase revenue without incurring additional customer acquisition costs if it can cross-sell additional products and features
- Marketing spend is minimal, showing it doesn’t need advertisements to acquire new users because of its well-known brand
- Highly efficient business model is illustrated by its impressive 20.5% EBITDA margin
At $77.25 per share, Roblox trades at 45.6x forward EV/EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Growth Stocks for this month. 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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free.