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1 Surging Stock for Long-Term Investors and 2 That Underwhelm
Exciting developments are taking place for the stocks in this article. They’ve all surged ahead of the broader market over the last month as catalysts such as new products and positive media coverage have propelled their returns.
But not every company with momentum is a long-term winner, and plenty of investors have lost money betting on short-term fads. All that said, here is one stock with the fundamentals to back up its performance and two best left ignored.
Two Momentum Stocks to Sell:
Kura Sushi (KRUS)
One-Month Return: +10.9%
Known for its conveyor belt that transports dishes to diners, Kura Sushi (NASDAQ:KRUS) is a chain of sushi restaurants serving traditional Japanese fare with a touch of modernity and technology.
Why Does KRUS Fall Short?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Cash burn makes us question whether it can achieve sustainable long-term growth
- 6× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
Kura Sushi’s stock price of $54.38 implies a valuation ratio of 36.5x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than KRUS.
UniFirst (UNF)
One-Month Return: +11.4%
With a fleet of trucks making weekly deliveries to over 300,000 customer locations, UniFirst (NYSE:UNF) provides, rents, cleans, and maintains workplace uniforms and protective clothing for businesses across various industries.
Why Does UNF Give Us Pause?
- Sales trends were unexciting over the last two years as its 4.4% annual growth was below the typical business services company
- Estimated sales growth of 2.2% for the next 12 months implies demand will slow from its two-year trend
- Earnings per share lagged its peers over the last five years as they only grew by 2.3% annually
At $197.43 per share, UniFirst trades at 28.2x forward P/E. Check out our free in-depth research report to learn more about why UNF doesn’t pass our bar.
One Momentum Stock to Watch:
Confluent (CFLT)
One-Month Return: +37.8%
Built by the original creators of Apache Kafka, the popular open-source messaging system, Confluent (NASDAQ:CFLT) provides a data infrastructure platform that enables organizations to connect their applications, systems, and data layers around real-time data streams.
Why Could CFLT Be a Winner?
- Billings growth has averaged 26.1% over the last year, indicating a healthy pipeline of new contracts that should drive future revenue increases
- Projected revenue growth of 16.7% for the next 12 months suggests its momentum from the last two years will persist
- Gross margin of 74.1% is reasonable for the industry and allows for steady investments in marketing and R&D
Confluent is trading at $30.14 per share, or 8x forward price-to-sales. Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
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The names generating the next wave of massive growth are right here in our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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