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. Keeping that in mind, here are two stocks with the fundamentals to back up their performance and one best left ignored.

One Momentum Stock to Sell:

Cognex (CGNX)

One-Month Return: +19.7%

Founded in 1981 when computer vision was in its infancy, Cognex (NASDAQ: CGNX) develops machine vision systems and software that help manufacturers and logistics companies automate quality inspection and tracking of products.

Why Are We Cautious About CGNX?

1. Sales trends were unexciting over the last five years as its 3.5% annual growth was below the typical business services company
2. Earnings per share fell by 2.2% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
3. Waning returns on capital imply its previous profit engines are losing steam

Cognex’s stock price of $64.70 implies a valuation ratio of 41.7x forward P/E. Check out our free in-depth research report to learn more about why CGNX doesn’t pass our bar.

Two Momentum Stocks to Buy:

Vita Coco (COCO)

One-Month Return: +70.5%

Founded in 2004 followed by a 2021 IPO, The Vita Coco Company (NASDAQ: COCO) offers coconut water products that are a natural way to quench thirst.

Why Are We Backing COCO?

1. Products are selling at a rapid clip as its unit sales averaged an outstanding 13.8% growth rate over the past two years
2. Earnings per share have massively outperformed its peers over the last three years, increasing by 52.4% annually
3. Industry-leading 37.2% return on capital demonstrates management’s skill in finding high-return investments, and its rising returns show it’s making even more lucrative bets

At $79.42 per share, Vita Coco trades at 42.9x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.

Sterling (STRL)

One-Month Return: +50.6%

Involved in the construction of a major highway, the Grand Parkway in Houston, TX, Sterling Infrastructure (NASDAQ: STRL) provides civil infrastructure construction.

Why Will STRL Outperform?

1. Market share has increased this cycle as its 19.8% annual revenue growth over the last two years was exceptional
2. Robust free cash flow margin of 15.6% gives it many options for capital deployment, and its growing cash flow gives it even more resources to deploy
3. Returns on capital are climbing as management makes more lucrative bets

Sterling is trading at $734.89 per share, or 39.4x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.

High-Quality Stocks for All Market Conditions

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 meeting 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 Exlservice (+354% five-year return). Find your next big winner with StockStory today.