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. Keeping that in mind, here is one stock with the fundamentals to back up its performance and two that may correct.
Two Momentum Stocks to Sell:
Sleep Number (SNBR)
One-Month Return: +76.7%
Known for mattresses that can be adjusted with regards to firmness, Sleep Number (NASDAQ:SNBR) manufactures and sells its own brand of bedding products such as mattresses, bed frames, and pillows.
Why Do We Avoid SNBR?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Earnings per share decreased by more than its revenue over the last three years, showing each sale was less profitable
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
At $3.02 per share, Sleep Number trades at 11.7x forward EV-to-EBITDA. If you’re considering SNBR for your portfolio, see our FREE research report to learn more.
Walker & Dunlop (WD)
One-Month Return: +13.7%
Originating as a small mortgage banking firm during the Great Depression in 1937, Walker & Dunlop (NYSE:WD) provides commercial real estate financing, property sales, appraisal, and investment management services with a focus on multifamily properties.
Why Are We Out on WD?
- Customers borrowered less money this cycle as its net interest income declined by 40.1% annually over the last five years
- Earnings per share fell by 14.6% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Tangible book value per share tumbled by 6.8% annually over the last five years, showing banking sector trends are working against its favor during this cycle
Walker & Dunlop’s stock price of $50.33 implies a valuation ratio of 1x forward P/B. To fully understand why you should be careful with WD, check out our full research report (it’s free).
One Momentum Stock to Buy:
CECO Environmental (CECO)
One-Month Return: +22%
With roots dating back to 1869 and a focus on creating cleaner industrial operations, CECO Environmental (NASDAQ:CECO) provides technology and expertise that helps industrial companies reduce emissions, treat water, and improve energy efficiency across various sectors.
Why Will CECO Beat the Market?
- Annual revenue growth of 19.9% over the last two years was superb and indicates its market share increased during this cycle
- Market share is on track to rise over the next 12 months as its 23.9% projected revenue growth implies demand will accelerate from its two-year trend
- Share buybacks catapulted its annual earnings per share growth to 23.6%, which outperformed its revenue gains over the last two years
CECO Environmental is trading at $75.00 per share, or 42.8x forward P/E. Is now a good time to buy? See for yourself in our full 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 meeting 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 (+1,326% between June 2020 and June 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.
