Exciting developments are taking place for the stocks in this article. They’ve all surged ahead of the broader market over the last month as catalysts such as new products and positive media coverage have propelled their returns.
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 are two stocks with the fundamentals to back up their performance and one best left ignored.
One Momentum Stock to Sell:
Peloton (PTON)
One-Month Return: +16.5%
Started as a Kickstarter campaign, Peloton (NASDAQ: PTON) is a fitness technology company known for its at-home exercise equipment and interactive online workout classes.
Why Do We Avoid PTON?
- Demand for its offerings was relatively low as its number of connected fitness subscribers has underwhelmed
- Historical operating margin losses point to an inefficient cost structure
- Capital intensity will likely ramp up in the next year as its free cash flow margin is expected to contract by 2.7 percentage points
At $8.58 per share, Peloton trades at 9.8x forward EV-to-EBITDA. If you’re considering PTON for your portfolio, see our FREE research report to learn more.
Two Momentum Stocks to Watch:
Lam Research (LRCX)
One-Month Return: +47.9%
Founded in 1980 by David Lam, the man who pioneered semiconductor etching technology, Lam Research (NASDAQ:LRCX) is one of the leading providers of wafer fabrication equipment used to make semiconductors.
Why Does LRCX Stand Out?
- Annual revenue growth of 12.9% over the last five years was superb and indicates its market share increased during this cycle
- Free cash flow margin increased by 7.2 percentage points over the last five years, giving the company more capital to invest or return to shareholders
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
Lam Research’s stock price of $143.50 implies a valuation ratio of 35.3x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
Robinhood (HOOD)
One-Month Return: +38.6%
With a mission to democratize finance, Robinhood (NASDAQ:HOOD) is an online consumer finance platform known for its commission-free stock and crypto trading.
Why Are We Backing HOOD?
- 40.9% annual increases in its average revenue per user over the last two years show its platform is resonating with power users
- Incremental sales over the last three years have been highly profitable as its earnings per share increased by 54.6% annually, topping its revenue gains
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its rising cash conversion increases its margin of safety
Robinhood is trading at $139.73 per share, or 59.6x 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
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking 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-micro-cap company Tecnoglass (+1,754% 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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