1 Momentum Stock with Impressive Fundamentals and 2 to Turn Down

Kayode Omotosho

Fri, May 16, 2025, 12:38 AM 3 min read

The stocks featured in this article are seeing some big returns. Over the past month, they’ve outpaced the market due to new product launches, positive news, or even a dedicated social media following.

While momentum can be a leading indicator, it has burned many investors as it doesn’t always correlate with long-term success. Keeping that in mind, here is one stock with lasting competitive advantages and two best left ignored.

One-Month Return: +31.2%

Established in 1946, Lincoln Educational (NASDAQ:LINC) is a provider of specialized technical training in the United States, offering career-oriented programs to provide practical skills required in the workforce.

Why Are We Hesitant About LINC?

1. Sluggish trends in its enrolled students suggest customers aren’t adopting its solutions as quickly as the company hoped

2. Cash-burning history makes us doubt the long-term viability of its business model

3. Diminishing returns on capital suggest its earlier profit pools are drying up

Lincoln Educational is trading at $22.57 per share, or 10.8x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than LINC.

One-Month Return: +33.3%

With technology that automatically adjusts insulin delivery based on continuous glucose monitoring data, Tandem Diabetes Care (NASDAQ:TNDM) develops and manufactures automated insulin delivery systems that help people with diabetes manage their blood glucose levels.

Why Do We Think TNDM Will Underperform?

1. Weak pump shipments over the past two years imply it may need to invest in improvements to get back on track

2. Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 47.1% annually

3. Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders

Tandem Diabetes’s stock price of $23 implies a valuation ratio of 38.8x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including TNDM in your portfolio, it’s free.

One-Month Return: +39.5%

Founded by two grad students of Harvard Business School, Cloudflare (NYSE:NET) is a software-as-a-service platform that helps improve the security, reliability, and loading times of internet applications.

Why Should You Buy NET?

1. Billings have averaged 27.9% growth over the last year, showing it’s securing new contracts that could potentially increase in value over time

2. Revenue outlook for the upcoming 12 months is outstanding and shows it’s on track to gain market share

3. Software platform has product-market fit given the rapid recovery of its customer acquisition costs