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.
However, not all companies with momentum are long-term winners, and many investors have lost money by following short-term trends. Keeping that in mind, here is one stock with lasting competitive advantages and two not so much.
Two Momentum Stocks to Sell:
Workday (WDAY)
One-Month Return: +46.8%
Born from the vision of PeopleSoft founders after Oracle's hostile takeover of their previous company, Workday (NASDAQ: WDAY) provides cloud-based software for financial management, human resources, planning, and analytics to help organizations manage their business operations.
Why Does WDAY Fall Short?
- 14.1% annual revenue growth over the last two years was slower than its software peers
- Estimated sales growth of 10.9% for the next 12 months implies demand will slow from its two-year trend
- Operating margin improvement of 5.9 percentage points over the last year demonstrates its ability to scale efficiently
Workday is trading at $205.30 per share, or 4.1x forward price-to-sales. Check out our free in-depth research report to learn more about why WDAY doesn’t pass our bar.
Palo Alto Networks (PANW)
One-Month Return: +12.3%
Founded in 2005 by security visionary Nir Zuk who sought to reimagine firewall technology, Palo Alto Networks (NASDAQ: PANW) provides AI-powered cybersecurity platforms that protect organizations' networks, clouds, and endpoints from sophisticated threats.
Why Do We Think Twice About PANW?
- Gross margin of 72% is below its competitors, leaving less money to invest in areas like marketing and R&D
- Competitive market means the company must spend more on sales and marketing to stand out even if the return on investment is low
- Day-to-day expenses have swelled relative to revenue over the last year as its operating margin fell by 1.5 percentage points
At $396.45 per share, Palo Alto Networks trades at 23.2x forward price-to-sales. To fully understand why you should be careful with PANW, check out our full research report (it’s free).
One Momentum Stock to Buy:
CSW (CSW)
One-Month Return: +17.2%
With over two centuries of combined operations manufacturing and supplying, CSW (NYSE: CSW) offers special chemicals, coatings, sealants, and lubricants for various industries.
Why Is CSW a Top Pick?
- Annual revenue growth of 19.7% over the last two years was superb and indicates its market share increased during this cycle
- Highly efficient business model is illustrated by its impressive 18.4% operating margin
- Earnings per share grew by 27.1% annually over the last two years, massively outpacing its peers
CSW’s stock price of $343.16 implies a valuation ratio of 27.1x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
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 (+1,460% 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.
