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 are two stocks with the fundamentals to back up their performance and one not so much.
One Momentum Stock to Sell:
Power Integrations (POWI)
One-Month Return: +32.7%
A leading supplier of parts for electronics such as home appliances, Power Integrations (NASDAQ:POWI) is a semiconductor designer and developer specializing in products used for high-voltage power conversion.
Why Do We Pass on POWI?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 4.2% annually over the last five years
- Overall productivity fell over the last five years as its plummeting sales were accompanied by a decline in its operating margin
- Sales were less profitable over the last five years as its earnings per share fell by 10.7% annually, worse than its revenue declines
Power Integrations’s stock price of $71.50 implies a valuation ratio of 56.7x forward P/E. Check out our free in-depth research report to learn more about why POWI doesn’t pass our bar.
Two Momentum Stocks to Watch:
Vertiv (VRT)
One-Month Return: +20.6%
Formerly part of Emerson Electric, Vertiv (NYSE:VRT) manufactures and services infrastructure technology products for data centers and communication networks.
Why Should You Buy VRT?
- Average organic revenue growth of 23.7% over the past two years demonstrates its ability to expand independently without relying on acquisitions
- Free cash flow margin grew by 22.4 percentage points over the last five years, giving the company more chips to play with
- Rising returns on capital show management is finding more attractive investment opportunities
At $338.95 per share, Vertiv trades at 52.7x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Thermon (THR)
One-Month Return: +24.3%
Creating the first packaged tracing systems, Thermon (NYSE:THR) is a leading provider of engineered industrial process heating solutions for process industries.
Why Does THR Catch Our Eye?
- Market share has increased this cycle as its 12.4% annual revenue growth over the last five years was exceptional
- Operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 46.1% over the last five years outstripped its revenue performance
Thermon is trading at $65.23 per share, or 31.6x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
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 for 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 (+1,326% 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.
