Great things are happening to the stocks in this article. They’re all outperforming the market over the last month because of positive catalysts such as a new product line, constructive news flow, or even a loyal Reddit fanbase.
However, not all companies with momentum are long-term winners, and many investors have lost money by following short-term trends. On that note, here is one stock we think lives up to the hype and two that may correct.
Two Momentum Stocks to Sell:
DaVita (DVA)
One-Month Return: +41.4%
With over 2,600 dialysis centers across the United States and a presence in 13 countries, DaVita (NYSE: DVA) operates a network of dialysis centers providing treatment and care for patients with chronic kidney disease and end-stage kidney disease.
Why Are We Cautious About DVA?
- Flat treatments over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
- Estimated sales growth of 2.4% for the next 12 months implies demand will slow from its two-year trend
- Free cash flow margin shrank by 1.5 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
DaVita’s stock price of $147 implies a valuation ratio of 10.6x forward P/E. Check out our free in-depth research report to learn more about why DVA doesn’t pass our bar.
Sysco (SYY)
One-Month Return: +17%
Powering more than 730,000 commercial kitchens across North America and Europe, Sysco (NYSE: SYY) is a global food distributor that supplies restaurants, healthcare facilities, schools, hotels, and other foodservice establishments with food products and related services.
Why Do We Think SYY Will Underperform?
- Unit sales averaged 1.1% growth over the past two years and imply healthy demand for its products
- Free cash flow margin is forecasted to grow by 1.3 percentage points in the coming year, potentially giving the company more chips to play with
- ROIC hasn’t moved, making investors question whether its recent investments can increase profitability
Sysco is trading at $89.54 per share, or 18.8x forward P/E. Read our free research report to see why you should think twice about including SYY in your portfolio.
One Momentum Stock to Watch:
WD-40 (WDFC)
One-Month Return: +18.6%
Short for “Water Displacement perfected on the 40th try”, WD-40 (NASDAQ: WDFC) is a renowned American consumer goods company known for its iconic and versatile spray, WD-40 Multi-Use Product.
Why Is WDFC Interesting?
- Differentiated product offerings are difficult to replicate at scale and result in a premier gross margin of 54.5%
- Robust free cash flow margin of 12.6% gives it many options for capital deployment
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures, and its returns are climbing as it finds even more attractive growth opportunities
At $245.00 per share, WD-40 trades at 38.9x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 5 Strong Momentum Stocks for this week. 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).
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 Exlservice (+354% five-year return). Find your next big winner with StockStory today.
