The stocks featured in this article are seeing some big returns. Over the past month, they’ve outpaced the market due to some combination of positive news, upbeat results, or supportive macro developments. As such, investors are taking notice and bidding up shares.
However, not all companies with momentum are long-term winners, and many investors have lost money by following short-term trends. All that said, here is one stock with lasting competitive advantages and two best left ignored.
Two Momentum Stocks to Sell:
Figs (FIGS)
One-Month Return: +51.9%
Rising to fame via TikTok and founded in 2013 by Heather Hasson and Trina Spear, Figs (NYSE: FIGS) is a healthcare apparel company known for its stylish approach to medical attire and uniforms.
Why Do We Avoid FIGS?
- Number of active customers has disappointed over the past two years, indicating weak demand for its offerings
- Poor free cash flow margin of 10.7% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Figs’s stock price of $14.76 implies a valuation ratio of 40.7x forward P/E. If you’re considering FIGS for your portfolio, see our FREE research report to learn more.
Dolby Laboratories (DLB)
One-Month Return: +28.5%
Known for its iconic "D" logo that appears before countless movies and TV shows, Dolby Laboratories (NYSE: DLB) designs and licenses audio and video technologies that enhance entertainment experiences in movies, TV shows, music, and other media.
Why Is DLB Risky?
- Muted 1.3% annual revenue growth over the last five years shows its demand lagged behind its software peers
- Customer acquisition costs take a while to recoup, making it difficult to justify sales and marketing investments that could increase revenue
- Day-to-day expenses have swelled relative to revenue over the last year as its operating margin fell by 3.3 percentage points
Dolby Laboratories is trading at $62.34 per share, or 4x forward price-to-sales. Check out our free in-depth research report to learn more about why DLB doesn’t pass our bar.
One Momentum Stock to Watch:
Five Below (FIVE)
One-Month Return: +25.2%
Often facilitating a treasure hunt shopping experience, Five Below (NASDAQ: FIVE) is an American discount retailer that sells a variety of products from mobile phone cases to candy to sports equipment for largely $5 or less.
Why Does FIVE Stand Out?
- Aggressive strategy of rolling out new stores to gobble up whitespace is prudent given its same-store sales growth
- Brick-and-mortar locations are witnessing elevated demand as their same-store sales growth averaged 8% over the past two years
- Market share will likely rise over the next 12 months as its expected revenue growth of 10% is robust
At $241.75 per share, Five Below trades at 26.4x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth 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 Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
