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1 Momentum Stock with Exciting Potential and 2 That Underwhelm
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.
While momentum can be a leading indicator, it has burned many investors as it doesn’t always correlate with long-term success. On that note, here is one stock with lasting competitive advantages and two not so much.
Two Momentum Stocks to Sell:
Sprout Social (SPT)
One-Month Return: +33.4%
Born from the recognition that businesses needed a centralized way to handle their growing social media presence, Sprout Social (NASDAQ:SPT) provides a comprehensive software platform that helps businesses manage, analyze, and optimize their presence across various social media networks.
Why Are We Hesitant About SPT?
- Customers were hesitant to make long-term commitments to its software as its 10.1% average ARR growth over the last year was sluggish
- Estimated sales growth of 5.3% for the next 12 months implies demand will slow from its two-year trend
- Persistent operating margin losses suggest the business manages its expenses poorly
Sprout Social’s stock price of $11.41 implies a valuation ratio of 1.4x forward price-to-sales. Dive into our free research report to see why there are better opportunities than SPT.
GoodRx (GDRX)
One-Month Return: +10.1%
Started in 2011 to tackle the problem of high prescription drug costs in America, GoodRx (NASDAQ:GDRX) operates a digital platform that helps consumers find lower prices on prescription medications through price comparison tools and discount codes.
Why Do We Avoid GDRX?
- Flat sales over the last two years suggest it must find different ways to grow during this cycle
- Modest revenue base of $785.2 million gives it less fixed cost leverage and fewer distribution channels than larger companies
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
At $3.48 per share, GoodRx trades at 10.6x forward P/E. Check out our free in-depth research report to learn more about why GDRX doesn’t pass our bar.
One Momentum Stock to Buy:
DoorDash (DASH)
One-Month Return: +16.6%
Founded by Stanford students with the intent to build “the local, on-demand FedEx", DoorDash (NASDAQ:DASH) operates an on-demand food delivery platform.
Why Will DASH Beat the Market?
- Orders are rising, meaning the company can increase revenue without incurring additional customer acquisition costs if it can cross-sell additional products and features
- Excellent EBITDA margin of 20% highlights the efficiency of its business model, and it turbocharged its profits by achieving some fixed cost leverage
- Incremental sales over the last three years have been highly profitable as its earnings per share increased by 98.3% annually, topping its revenue gains
DoorDash is trading at $233.80 per share, or 23.8x forward EV/EBITDA. 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 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 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.