Each stock in this article is trading near its 52-week high. These elevated prices usually indicate some degree of investor confidence, business improvements, or favorable market conditions.

However, not all companies with momentum are long-term winners, and many investors have lost money by following short-term trends. Keeping that in mind, here is one stock with the fundamentals to back up its performance and two best left ignored.

Two Stocks to Sell:

ScanSource (SCSC)

One-Month Return: +16%

Operating as a crucial link in the technology supply chain since 1992, ScanSource (NASDAQ: SCSC) is a hybrid distributor that connects hardware, software, and cloud services from technology suppliers to resellers and business customers.

Why Are We Hesitant About SCSC?

1. Annual sales declines of 4.9% for the past two years show its products and services struggled to connect with the market during this cycle
2. Projected sales growth of 2.4% for the next 12 months suggests sluggish demand
3. Poor free cash flow margin of 3.4% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends

ScanSource is trading at $47.88 per share, or 11.1x forward P/E. Dive into our free research report to see why there are better opportunities than SCSC.

Citigroup (C)

One-Month Return: +4.5%

With operations in nearly 160 countries and a history dating back to 1812, Citigroup (NYSE: C) is a global financial services company that provides banking, investment, wealth management, and payment solutions to consumers, corporations, and governments.

Why Are We Cautious About C?

1. Scale is a double-edged sword because it limits the firm’s growth potential compared to its smaller competitors, as reflected in its below-average annual net interest income increases of 7% for the last five years
2. Earnings per share lagged its peers over the last five years as they only grew by 2.5% annually
3. ROE of 7.5% reflects management’s challenges in identifying attractive investment opportunities

At $131.27 per share, Citigroup trades at 1.1x forward P/B. Check out our free in-depth research report to learn more about why C doesn’t pass our bar.

One Stock to Watch:

Cadence Design Systems (CDNS)

One-Month Return: +17.9%

Powering the chips behind everything from smartphones to AI accelerators for over 35 years, Cadence Design Systems (NASDAQ: CDNS) provides essential computational software, hardware, and intellectual property used by engineers to design and verify advanced electronic systems and semiconductors.

Why Does CDNS Catch Our Eye?

1. Superior software functionality and low servicing costs are reflected in its best-in-class gross margin of 87.1%
2. User-friendly software enables clients to ramp up spending quickly, leading to the speedy recovery of customer acquisition costs
3. CDNS is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders

Cadence Design Systems’s stock price of $412.05 implies a valuation ratio of 17.8x forward price-to-sales. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.

Stocks We Like Even More

ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.

Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum 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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.