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.
But not every company with momentum is a long-term winner, and plenty of investors have lost money betting on short-term fads. On that note, here is one stock with the fundamentals to back up its performance and two that may correct.
Two momentum stocks to sell:
PVH (PVH)
One-month return: +28.1%
Founded in 1881 by a husband and wife duo, PVH (NYSE: PVH) is a global fashion conglomerate with iconic brands like Calvin Klein and Tommy Hilfiger.
Why Do We Steer Clear of PVH?
- Constant currency growth was below our standards over the past two years, suggesting it might need to invest in product improvements to get back on track
- Poor free cash flow margin of 7% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Stagnant returns on capital show management has failed to improve the company’s business quality
PVH’s stock price of $95.96 implies a valuation ratio of 8.2x forward P/E. To fully understand why you should be careful with PVH, check out our full research report (it’s free).
GE HealthCare (GEHC)
One-month return: +31.2%
Spun off from industrial giant General Electric in 2023 after over a century as its healthcare division, GE HealthCare (NASDAQ: GEHC) provides medical imaging equipment, patient monitoring systems, diagnostic pharmaceuticals, and AI-enabled healthcare solutions to hospitals and clinics worldwide.
Why Does GEHC Give Us Pause?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Anticipated sales growth of 4.4% for the next year implies demand will be shaky
- ROIC hasn’t moved, making investors question whether its recent investments can increase profitability
At $86.26 per share, GE HealthCare trades at 15.1x forward P/E. Check out our free in-depth research report to learn more about why GEHC doesn’t pass our bar.
One momentum stock to buy:
Instacart (CART)
One-month return: +28.4%
Powering more than one billion grocery orders since its founding, Instacart (NASDAQ: CART) is an online grocery shopping and delivery platform that partners with retailers to help customers shop from local stores through its app or website.
Why Are We Bullish on CART?
- Superior platform functionality and low servicing costs are reflected in its premier gross margin of 73.2%
- Healthy EBITDA margin of 29.5% shows it’s a well-run company with efficient processes, and its operating leverage amplified its profits over the last few years
- CART is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its improved cash conversion implies it’s becoming a less capital-intensive business
Instacart is trading at $58.63 per share, or 9.3x 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
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
