The stocks in this article are all trading near their 52-week highs. This strength often reflects positive developments such as new product launches, favorable industry trends, or improved financial performance.
But not every company with momentum is a long-term winner, and plenty of investors have lost money betting on short-term fads. On that note, here are two stocks with lasting competitive advantages and one not so much.
One Stock to Sell:
Chewy (CHWY)
One-Month Return: +25.5%
Founded by Ryan Cohen, who later became known for his involvement in GameStop, Chewy (NYSE: CHWY) is an online retailer specializing in pet food, supplies, and healthcare services.
Why Is CHWY Not Exciting?
- Scale is a double-edged sword because it limits the company's growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 9.8% for the last three years
- Estimated sales growth of 4.5% for the next 12 months implies demand will slow from its three-year trend
- Bad unit economics and steep infrastructure costs are reflected in its low gross margin of 28.8%
Chewy is trading at $47.46 per share, or 29.9x forward EV/EBITDA. If you’re considering CHWY for your portfolio, see our FREE research report to learn more.
Two Stocks to Watch:
Zscaler (ZS)
One-Month Return: +25.9%
After successfully selling all four of his previous cybersecurity companies, Jay Chaudhry's fifth venture, Zscaler (NASDAQ: ZS) offers software-as-a-service that helps companies securely connect to applications and networks in the cloud.
Why Do We Like ZS?
- ARR trends over the last year show it’s maintaining a steady flow of long-term contracts that contribute positively to its revenue predictability
- Forecasted revenue growth of 19.5% for the next 12 months indicates its momentum over the last three years is sustainable
- Robust free cash flow margin of 27.1% gives it many options for capital deployment
At $293.30 per share, Zscaler trades at 14.9x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.
Cardinal Health (CAH)
One-Month Return: +2.7%
Operating as a critical link in the healthcare supply chain since 1979, Cardinal Health (NYSE: CAH) distributes pharmaceuticals and manufactures medical products for hospitals, pharmacies, and healthcare providers across the global healthcare supply chain.
Why Are We Fans of CAH?
- Unparalleled scale of $222.3 billion in revenue gives it negotiating leverage and staying power in an industry with high barriers to entry
- Projected revenue growth of 8.4% for the next 12 months indicates demand will rise above its two-year trend
- Earnings growth has topped the peer group average over the last five years as its EPS has compounded at 7.7% annually
Cardinal Health’s stock price of $156.14 implies a valuation ratio of 17.8x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free.
